Portafolio Theory Flashcards
(36 cards)
R|(Palito Arriba)
Expected Return
Σ
Posibles states of the world
Ri
Return generate by the asset i
Pi
Probability of occurrency i
Risk
variability of return measure by VAR and STD
Variance
Sum (Ri-R|)2 *p1
Standard Variantion
√VAR
When Ri
Minimize risk
When STD
Maximixe return
Rp
Return portafolio (Xi*Ri)
COV
Sum Rp
Correlation coeficient (P)
COVAB / σA*σB
PAB = 1
STDAB = XaσA+XbσB
PAB = -1
STDAB = XaσA-XbσB
PAB = 0
√ XaσA+XbσB
Efficient frontier
Limited of risk free return
CML
Capital market line [Ri = (rm-rf)/stdM*stdI
CAMP
capital asset pricing model [Ri=Rf+(rm-rf)/σm *σi *Pim]
Cyclical company
Business whose success depend on the economy and clients actitivites.
Asset class
investment make of different investment
systematic risk
Bigger poblem, affects all the parties
Covariance
calculate the difference between one asset and experiment
Hedge fundes
freeer investors (Lower degree of regulations)
Equity study index
measure of an equity managment
