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CFP > Investments > Flashcards

Investments Flashcards

1
Q

Margin Call Formula

A

Loan / 1-Maintenance Margin

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2
Q

Standard Deviation probability

A

68, 95, 99

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3
Q

Standard Deviation Calculator keystrokes

A

€, blue.

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4
Q

Coefficient of Variation

A

Which investment has more relative risk

CV=standard deviation/average return

Useful in comparing two assets with different average returns

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5
Q

Covariance

A

Measures relative risk

COVab = (STDa) x (STDb) x (STDab)

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6
Q

Correlation

A

Correlation = COV/ (STDa)(STDb)

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7
Q

Systemic Risks

A

PRIME

Purchasing Power
Reinvestment Risk
Interest Rate 
Market Risk
Exchange Risk
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8
Q

Standard Deviation calculation trick

A

Take the weighted average and pick from whatever number is lover than the average

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9
Q

Unsystematic Risk

A

ABCDEFG

Accounting 
Business 
Country 
Default 
Executive risk
Financial risk
Government risk
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10
Q

Treynor Index

A

Return of Portfolio - Risk free / beta of portfolio

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11
Q

Sharpe index

A

Return of portfolio- risk free / standard deviation of portfolio

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12
Q

Jensens Alspha

A

Return of portfolio- (risk free+ (return market-risk free) beta of portfolio

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13
Q

Information Ratio

A

Return of portfolio- return of benchmark / tracking error

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14
Q

Treynor Index

A

Return of portfolio- risk free / beta of portfolio

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15
Q

Sharpe Index

A

Return of portfolio- risk free / standard deviation of portfolio

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16
Q

Jensens alpha

A

Portfolio return - [risk free + (return market-risk free) beta of portfolio {

17
Q

Summary of performance measures

A

Treynor and alpha use beta
Beta appropriate if r2 > .70
Sharpe uses standard deviation

CFP (2 decks)

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