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Briefly Describe the Three Strategies for Creating Multiple-Correlated Groups: (1)

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Essay

Briefly describe the three strategies for creating multiple-correlated groups: (1) matched sets, (2) repeated measures, and (3) natural sets.


Definitions:

STRIPPED Cash Flows

Cash flows from financial instruments that have been separated from their financial structure, often used in securitization.

Arbitrage

The practice of taking advantage of a price difference between two or more markets, striking a combination of matching deals that capitalize upon the imbalance.

Forward Rates

Interest rates or currency exchange rates fixed now for transactions that will occur at a future date.

Future Short Rates

Predicted interest rates for short-term debt securities in the future, based on current market conditions and monetary policy expectations.

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