Question: Help solve Q6 please, thanks (a) Discuss the underlying principles of a trading rule that is based on moving average cross over. (7 marks) (b)

Help solve Q6 please, thanks

Help solve Q6 please, thanks (a) Discuss the underlying principles of a

(a) Discuss the underlying principles of a trading rule that is based on moving average cross over. (7 marks) (b) Discuss the dilemma posted by possible false signals in a trading rule based on moving average cross over. (5.5 marks) 6. Discuss three ways of diversification of risk in investment. (12.5 marks) Formula: Lognormal distribution: If X is lognormally distributed with mean u and variance o?, then E(X) = ell+o2/2 var(X) = (eos 1)e 2u+g

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