With Respect to Positioning, Explain Points-Of-Parity and Points-Of-Difference

question 3

Essay

With respect to positioning, explain points-of-parity and points-of-difference.

Analyze the composition of a global minimum variance portfolio.

Calculate the expected rate of return and standard deviation of a portfolio.

Understand and calculate covariance between two securities.

Understand and calculate the correlation coefficient between two securities.

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Definitions:

Monthly Payment

A fixed amount of money paid each month for a loan or mortgage over a set term.

Loan

Money that is loaned and needs to be paid back, including interest.

Compounded Semi-annually

Interest calculation method where interest is added to the principal amount twice a year, leading to the interest being compounded for the second term.

Goal

An intended outcome or target that an individual or organization aims to achieve.