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How does the expected value of the log of your net worth deal with the possibility of a negative net worth? Any finite probability of zero net worth will weigh
by imh 10y ago
How does the expected value of the log of your net worth deal with the possibility of a negative net worth? Any finite probability of zero net worth will weigh infinitely in the log domain, right?
- btilly 10y agoIt doesn't. Obviously the stated rule is a simplification of reality. :-) (In reality bankruptcy laws give a way to reset negative net worth to a situation where you can again go positive.)