Entropy measure of diversification

Entropy ginmill of variegation This type of measure has belatedly gained favor for assessing the degree of diversification practiced by firms. hex elaborate in 1-2 pages on the measure and its alternatives. Your deadline: November 27. ________________________________________ In finance, diversification is a risk of exposure management technique that mixes a widely variety of investitures within a specific party portfolio. It is unsounded to minimize the risk from any one enthronement by reducing the impact of single security fluctuations on a diverse portfolio. Three primary strategies be employ in improving diversification: (1) spreading the portfolio among multiple investment vehicles, (2) alter the risk in the specific securities, and (3) varying types of securities by industry, geography, or other variables. There are two familiar types of diversification horizontal (when a portfolio is diversified between same-type investments) or just (investment b etween different types of securities). It is generally understood that, although diversification reduces the risk of a portfolio, it does not necessarily reduce the returns. This has been the divulge construction in various studies, in different countries, that elapse birth looked to comment the link between business diversification and corporative results.

Essentially, three models have been tested to describe this association: additive model, inverted U curve model and an intermediate model. In this sense, noise measures allow for important tools to indicate variety in distributions at concomitant moment s in time (e.g., market shares) and to deco! mpose evolutionary processes oer time (e.g., technical change). There are several applications of entropy in the realms of industrial organisation and foot studies. The entropy form expresses the expected information content or uncertainty of a probability distribution. It can be considered as a measure of uncertainty. The more uncertainty prior to the means that an event...If you want to piddle a full essay, order it on our website: OrderCustomPaper.com

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