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Define and Explain the Difference Between Fashion and Fad

question 16

Essay

Define and explain the difference between fashion and fad.


Definitions:

Risk Aversion

The inclination to avoid taking risks, preferring safety over potential higher returns.

Optimal Risky Portfolio

A portfolio that offers the highest expected return for a given level of risk.

Systematic Variance

The portion of a security's return variance that is attributable to macroeconomic factors and cannot be diversified away.

Total Variance

The sum of squared deviations from the mean, indicating the overall level of variability within a dataset.

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