Interpret Risk Statistics
Series 65 · Flashcards · Recall
SERIES 65 · FLASHCARDS
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QUESTION
Which risk does beta measure relative to a market index?
QUESTION
State the formula for beta of asset
i
i
i
relative to market
m
m
m
using covariance and variance.
QUESTION
What is the formula for arithmetic mean return for returns
r
1
.
.
.
r
n
r_1...r_n
r
1
...
r
n
?
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ANSWER
r
ˉ
=
∑
i
=
1
n
r
i
n
\bar{r}=\frac{\sum_{i=1}^{n} r_i}{n}
r
ˉ
=
n
∑
i
=
1
n
r
i
. The arithmetic mean return averages the sum of periodic returns over the number of periods to measure central tendency.
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