Podcast
Questions and Answers
What is the formula for calculating the arithmetic mean?
What is the formula for calculating the arithmetic mean?
- $\frac{x_1 + x_2 + ... + x_n}{n}$ (correct)
- $\frac{x_1 × x_2 × ... × x_n}{n}$
- $\sqrt[n]{x_1 × x_2 × ... × x_n}$
- $\frac{x_1 - x_2 + ... + x_n}{n}$
When should the geometric mean be used?
When should the geometric mean be used?
- When the observations are not independent (correct)
- When the observations are independent
- When the observations are normally distributed
- When the observations are positively correlated
What happens to the capital invested in the second period if the portfolio declines by 50% in the first period?
What happens to the capital invested in the second period if the portfolio declines by 50% in the first period?
- It becomes zero
- It decreases significantly (correct)
- It remains the same
- It increases significantly
Why does the geometric mean take account of the effect of a 50% decline in portfolio value?
Why does the geometric mean take account of the effect of a 50% decline in portfolio value?
What is the main difference between the arithmetic and geometric means of periodic returns?
What is the main difference between the arithmetic and geometric means of periodic returns?
What was the mean return of the portfolio in the example?
What was the mean return of the portfolio in the example?
What is the primary benefit of combining assets with low or negative correlation in a portfolio?
What is the primary benefit of combining assets with low or negative correlation in a portfolio?
How is the mean return of a portfolio calculated?
How is the mean return of a portfolio calculated?
What is the definition of a period in the context of portfolio return calculation?
What is the definition of a period in the context of portfolio return calculation?
What is the return of the portfolio in the given example?
What is the return of the portfolio in the given example?
What is the difference between arithmetic mean and geometric mean in the context of asset returns?
What is the difference between arithmetic mean and geometric mean in the context of asset returns?
What is the beginning-of-period value of asset ABC?
What is the beginning-of-period value of asset ABC?
What is the change in capital value of asset DEF?
What is the change in capital value of asset DEF?
What is the end-of-period value of the portfolio?
What is the end-of-period value of the portfolio?
What is the geometric mean return for the given period?
What is the geometric mean return for the given period?
What is the main difference between using arithmetic mean and geometric mean for return calculation?
What is the main difference between using arithmetic mean and geometric mean for return calculation?
What is the future value when the arithmetic mean return is used?
What is the future value when the arithmetic mean return is used?
How is the volatility of a two-asset portfolio impacted by the correlation between the assets?
How is the volatility of a two-asset portfolio impacted by the correlation between the assets?
Which value was calculated using Excel without rounding errors?
Which value was calculated using Excel without rounding errors?
What impact does the correlation between two assets have in a two-asset portfolio?
What impact does the correlation between two assets have in a two-asset portfolio?
Which formula represents the future value using the arithmetic mean return?
Which formula represents the future value using the arithmetic mean return?
Which rate of return calculates the most accurate ending value of the portfolio?
Which rate of return calculates the most accurate ending value of the portfolio?
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