What are the risks in running an index forward position (eg short fwd vs long stocks or vice-versa) ?- how do you hedge them out? I am told that this is similar to the uncovered interest rate parity, is this right?Thanks!

<t>2 options really,like what dimitris said, t-stat = [beta1 - 1 (Ho)]/SE (beta1), instead of the usual (beta1-0)/SEanother way is to rearrange your model. try to make your model, Y = beta0 + beta1*X + einto:- (Y-X) = beta0 + (beta1 - 1)*X + e, that way you may use the normal t-stat formula.most sof...

<t>Here's the questionI am having trouble understanding (b)(v), especially the terms forecast dynamically.How do I actually forecast? I tried using values in Equation [4] to estimate [3] as [4]+[3]= the next term, but is this correct?If that is the case, I have around 300+ observations of data, and ...

if it's not too troublesome, may i get a copy too?Thanks alot!

<t>This is something rather different than what you have suggested.Correct me if I am wrong, are you implying that volatility in stock index is higher or lower now than say as compared to a typical stock?I know now that it depends on the correlation between the stock and the market. But my main conc...

How to show volatility in Stock index < individual Stock?Hi, I am working on this subject using Option Pricing but I can't seem to relate the them together as well as using CAPM.Please could someone guide me around this?Thx!