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Also, investors tend to avoid risk on the downside, whereas the possibility of bigger returns than expected earlier is rarely a turn-off for them; as a result of this logical conclusion the model only incorporates downside risk. Because investing in developing markets is very risky for a western investor, he tries to primarily avoid the risk of losing the initial value of his investments, or avoids decreasing of this value below a predefined target level.
Because of this using the semidispersion and, consequently, standard semideviation is reasonable.
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