Hi @Admin & Group members,
I was learning the VaR concept yesterday and the VaR did not sink in quiet well!
I do not have a statistic background, but i would really appreciate it if someone explained to me why we have to multiply the nth year to the weight of the discounted return to come up with the payback period for HALF of the total returns… ie
Total = 4.167 years… (my concern area is the *1 *2 *3 and *4)
Thanks & Regards,
Err….I think you are talking about Macauleys Duration (not VaR)
You do not need to be able to prove why it comes to half the total returns, but if you watch the lecture on here then you will understand the reason for having the weighting.
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