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Assume an investor A with a high degree of risk aversion and an investor B with a lower degree of risk aversion. Which one will
- Assume an investor A with a high degree of risk aversion and an investor B with a lower degree of risk aversion. Which one will prefer investment portfolios with higher risk premiums? Which one will prefer investment portfolios with higher Sharpe ratios?
- What is value at risk (VaR)? How is it used? Describe two short-comings of using VaR.
- How does a mortgage pass-through security work? Be sure to describe the cash flows.
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