What They Don’t Teach You In Grad School by Perry J. Kaufman
You’re most likely not going to engage in a conversation about “lognormal volatility” at a cocktail party. But you may have come across the term in financial texts. This may or may not surprise you: When it comes to the stock market, what you read may not be completely accurate. Here’s something that may turn out to be important to you.
Graduate finance courses teach the theory of price relationships and tools for working with them. You would like to think that what is taught is always correct. Take the concept of modern portfolio theory, that is, optimizing the assets to find the best portfolio in terms of reward to risk. Over the years we have learned two important facts: ...