So, I have really gone bonkers with these topics that are so closely related to each other.
If someone could help creating a difference among these concepts that ll be of great help.
In reading 49, just after explaining the concept of ITRS, it goes crazy. First it explains, why Ut is low when Income is high in future, but in the very next topic it says No No, Uo is actually low in good times.
Similarly, first it explains that a risky asset will carry a negative covariance between expected future prices and investor’s MRS but in the very next concept it says NO NO, actually most risky asset have a positive risk premium.
What am i missing? Pls somebody help.