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Hi David, I was going through spreadsheet 4.b.3, and I have a question regarding the average return. It is calculated as (daily log return - r_avg)^2. What exactly is the r_avg here? thanks, Ravi

And then David, the criticisms of the interest rate swaps are more or less skipped in the videos. Is that deliberate, in the sense that from the examination point of view, they arent really important?

Hi David, I was going through the tutorial and found no intuition as to how you say that the number of contracts that need to be shorted is given by PD_p/ FD_f And why shorted. What kind of portfolio are we talking abt there?

Hi David, I think the way you explain these two terms is a little confusing. The Hull reading says that its contango when the future price of an asset today is more than the expected future spot of the asset, and its backwardation otherwise. So in Contango, traders long the contract lose...

I think you can do that by borrowing at the risk free rate and investing in the market portfolio.

HI David, I dont exactly understand how you say ARCH is a generalised form of EWMA. Assuming the w is 0, we basically have ARCH as a weighted sum of the spreads (or whatever those factors are). If the number of terms is infinite, and the weights are tending to zero, how does it stll go to the...

thanks David, that was most helpful. Ravi

Also David, In the XLS 1.a.5, where we look at APT, while calculating the APT you do not add the beta*exposure to the APT. Shouldn't that figure in the sum-product? Because the beta is one of the exposures, and this is where the connection between CAPM and APT comes up.

Hi David The pdf document for Foundations.a.ii is missing. The link there is to Foundations.a.i. And I have a question in Foundation.1.b. In slide 26, where we are looking at how risk management can create value by handling bankruptcy cost, I fail to see where exactly risk management is...