Investment Math edited untitled.md  almost 8 years ago

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Rebalancing does not need to have a contrarian flavour. For this reason, the claim that rebalancing has benefits is empty. It needs further qualification. I illustate illustrate  this using leverage. As usual, I take a world with two assets, cash bearing zero interest rate and a risky asset with price \(p\). At inception, investment is initiated with one dollar. The initial price is \(p_{0}=1\).