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4. Discuss why volatility, measured in terms of standard deviation of asset returns, is a crucial parameter in financial markets, with special reference to: (i)

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4. Discuss why volatility, measured in terms of standard deviation of asset returns, is a crucial parameter in financial markets, with special reference to: (i) asset pricing and international portfolio diversification (ii) option pricing (iii) performance measurement (iv) hedging foreign exchange risk (v) policy-making and financial regulation

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