Chapter 1 Flashcards
The return on an investment measured in dollars that accounts for all cash flows and capital gains or losses
Total Dollar Return
The annual stock dividend as a percentage of the initial stock price
Dividend Yield
The change in stock price as a percentage of the initial stock price
Capital Gains Yield
The return on an investment measured as a percentage that accounts for all cash flows and capital gains or losses
Total Percent Return
The return on an investment expressed on a per-year, or annualized basis
Effective Annual Return (EAR)
The rate of return on a riskless investment
Risk-Free Rate
The extra return on a risky asset over the risk-free rate; the reward for bearing risk
Risk Premium
A common measure of volatility
Variance
The square root of the variance
Standard Deviation
A symmetric, bell-shaped frequency distribution that is completely defined by its average and standard deviation
Normal Distribution
The average compound return earned per year over a multiyear period
Geometric Average Return
The return earned in an average year over a multiyear period
Arithmetic Average Return
Average compound rate of return earned per year over a multiyear period accounting for investment inflows and outflows
Dollar-Weighted Average Return
