In the book Signal and Noise, the author mentions several ti…

In the book Signal and Noise, the author mentions several times that interdependence in data can make things more complicated. Using examples from the book or your own business examples explain how interdependent data can and SHOULD effect your interpretation of the results. (Hint: the ratings agencies failed to recognize this interdependence when calculating risk).

You see a stock that you believe is highly undervalued and w…

You see a stock that you believe is highly undervalued and want to purchase as many shares as possible. However you have limited cash, only about $500.00. So you borrow and additional $9,500.00 dollars in order to purchase the shares. You have just made a _______________, which increases the risk you face should the stock price drop.