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Price dispersion can be viewed as a measure of trading frictions (or, tautologically, as a violation of the law of one price). It is often attributed to consumer search costs or unmeasured attributes (such as the reputation) of the retailing outlets involved. There is a difference between price dispersion and price discrimination. The latter ...
The average age of contracts is one measure of nominal rigidity. However, it suffers from interruption bias: at any point of time, we will only observe how long a price has been at its current level. We might wish to ask what will its completed length be at the next price change. This is the second measure.
Market risk is the risk of losses in positions arising from ... Use of value at risk vs. expected shortfall to measure of risk under ... reduce exposure fuel price ...
In financial mathematics, a risk measure is used to determine the amount of an asset or set of assets (traditionally currency) to be kept in reserve. The purpose of this reserve is to make the risks taken by financial institutions , such as banks and insurance companies, acceptable to the regulator .
That is, if portfolio always has better values than portfolio under almost all scenarios then the risk of should be less than the risk of . [2] E.g. If is an in the money call option (or otherwise) on a stock, and is also an in the money call option with a lower strike price.
The idea of compensating differentials has been used to analyze issues such as the risk of future unemployment, [4] the risk of injury, [5] the risk of unsafe intercourse, [6] the monetary value workers place on their own lives, [7] and in explaining geographical wage differentials. [8] [9] [10] [11]
Determining that a risk has been reduced to ALARP involves an assessment of the risk to be avoided, of the sacrifice (in money, time and trouble) involved in taking measures to avoid that risk, and a comparison of the two. This is a cost–benefit analysis (CBA).
[10] [11] The CAPM, for example, can be derived by linking risk aversion to overall market return, and restating for price. [9] Black-Scholes can be derived by attaching a binomial probability to each of numerous possible spot-prices (i.e. states) and then rearranging for the terms in its formula.