Hello professor,
In this exercise, I understand why we computed standards deviation and variance to assess if the risk was higher or lower. Although, I didn't understand why to compute it we used market values instead.
I am sorry, I do not see where we use market values.
Just in case it helps, we are interested in the level of risk per euro invested. This way, we can compare investment opportunities with different initial investment levels. To get the risk per euro, we always compute the variance or standard deviation of the returns.
Just in case it helps, we are interested in the level of risk per euro invested. This way, we can compare investment opportunities with different initial investment levels. To get the risk per euro, we always compute the variance or standard deviation of the returns.