Describe the Fair Value Hierarchy as Defined in SFAS No

question 39

Essay

Describe the fair value hierarchy as defined in SFAS No.157(FASB ASC 820).

Understand the difference-in-difference approach and its application in comparing performance metrics across different conditions or time periods.

Identify the considerations of representativeness and leakage in experimental design and their implications.

Recognize the concepts of "false positive" and "false negative" in hypothesis testing.

Learn how to calculate the difference-in-difference estimates and interpret their results in real-world scenarios.

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Definitions:

Factor Portfolios

Investment portfolios constructed to capture risk factors or sources of returns that are believed to explain the performance of securities.

Expected Return

The weighted average of all possible returns for a given investment, with weights being the probabilities of each outcome.

Risk-Free Rate

The hypothetical return rate on an investment that carries no risk of losing money, commonly illustrated by the interest rate on government securities.