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please please answer Sheet 2: Volatility There are four series of annual returns covering a thirty-year period, with an average annual return of 2%,4%,6% and
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Sheet 2: Volatility There are four series of annual returns covering a thirty-year period, with an average annual return of 2%,4%,6% and 8%, respectively. a) What happens to the difference between the average return and geometric return as volatility increases? By "difference", I mean average return minus geometric return. Does the difference INCREASE or DECREASE? b) The return per unit of risk decreases as volatility increases. Does the return per unit of risk decrease at a LINEAR rate or FASTER THAN A LINEAR RATE? c) What conclusion(s) did you draw? In other words, what did you learn? (extra credit question) Sheet 3: Drawdown A $100,000 investment account experiences a drawdown (negative total return. What total return is needed to restore the account back to its initial $100,000 value? You need to fill the returns in the gray cells. Use the spreadsheet. You will be submitting the spreadsheet, so if you have trouble entering the returns in this Word document, don't worry, just ensure the returns are in the spreadsheet. Sheet 2: Volatility There are four series of annual returns covering a thirty-year period, with an average annual return of 2%,4%,6% and 8%, respectively. a) What happens to the difference between the average return and geometric return as volatility increases? By "difference", I mean average return minus geometric return. Does the difference INCREASE or DECREASE? b) The return per unit of risk decreases as volatility increases. Does the return per unit of risk decrease at a LINEAR rate or FASTER THAN A LINEAR RATE? c) What conclusion(s) did you draw? In other words, what did you learn? (extra credit question) Sheet 3: Drawdown A $100,000 investment account experiences a drawdown (negative total return. What total return is needed to restore the account back to its initial $100,000 value? You need to fill the returns in the gray cells. Use the spreadsheet. You will be submitting the spreadsheet, so if you have trouble entering the returns in this Word document, don't worry, just ensure the returns are in the spreadsheetStep by Step Solution
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