Hi David
Regarding Stultz Chapter 2 reading on hedging irrelvance proposition:
I do understand the general concept that as the beta increases the expected return from CAPM increases which then means a higher discount rate is applied. But am not able to make a link from this to normal backwardation. (You state in slide 16 that Systematic risk (positive beta) implies normal backwardation). Could you provide some more explaination on this?
Great videos on foundation 1a and 1b. Looking forward eagerly to the next set
Regards
Venu Nair
Regarding Stultz Chapter 2 reading on hedging irrelvance proposition:
I do understand the general concept that as the beta increases the expected return from CAPM increases which then means a higher discount rate is applied. But am not able to make a link from this to normal backwardation. (You state in slide 16 that Systematic risk (positive beta) implies normal backwardation). Could you provide some more explaination on this?
Great videos on foundation 1a and 1b. Looking forward eagerly to the next set
Regards
Venu Nair