Tutorial lessons
04 Valuation and Risk Models
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Lessons
Tutorial lessons
VRM 1: Measures of Financial Risk
What the mean-variance framework says about risk and return Investing trades one thing against another, since accepting more uncertainty is what buys a higher average outcome. The mean-variance framew
VRM 2: Calculating and Applying VaR
Linear and non-linear portfolios: definitions and examples A portfolio is linear when its value responds in strict proportion to the market variables underneath it. Hold 100 shares priced at USD 50 ap
VRM 3: Measuring and Monitoring Volatility
How asset return distributions deviate from the normal distribution A volatility that never moved would be easy to pin down. Feed a long run of past returns into the usual standard deviation formula,
VRM 4: External and Internal Credit Ratings
What a credit rating measures and why credit rating agencies exist A credit rating is a compressed answer to one question: how likely is it that a borrower fails to pay what it owes? Everything else a
VRM 5: Country Risk
What country risk is and why investors and lenders measure it A company with plants, customers or subsidiaries abroad picks up exposures that have nothing to do with the quality of its products and ev