Question: When constructing an investment portfolio, why is a top-down strategy recommended? What is value at risk (VaR)? How is it used? Describe two short-comings of

  1. When constructing an investment portfolio, why is a top-down strategy recommended?
  2. What is value at risk (VaR)? How is it used? Describe two short-comings of using VaR.
  3. How does a mortgage pass-through security work? How is owning $200,000 in MBS different than owning the mortgage on one house for $200,000?

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