INV Flashcards
When we see IRR, or dollar weighted return, or the investors return, we want to use cash flows
This is also the investors’ return.
Geometric mean (time weighted return)
Geometric mean is adding one to each percentage return and then using TVM to find interest rate. This is essentially the mutual funds performance overtime.
Use the + 1 on returns, then do tvm on that FV with -1 PV. Find i
Dollar-weighted return, or investor’s return
IRR, or the individualized to return. Must use CFs (CFj button)
Holding Period Return (HPR)
Don’t confuse with IRR.
Sale proceeds +/- div/int/tax/margin - cost
____________________________________________
cost
ρ symbol
Correlation coefficient
COV formula
Covariance
Coefficient of variation
CV = Std dev / avg return (mean)
Which bond duration in rising or falling interest rate expectation?
UPS - interest rates UP, Shorten duration
FALLEN - int. rates FALL, LENgthen dur.
R^2 greater than 60
Look for highest Jensen/alpha.
If not there, pick highest Treynor.
R^2 is less than 60
Pick highest Sharpe ratio
Correlation coefficient
“R”…. R^2 for alpha (jensen) or treynor selection
At what price is margin call required?
1 - initial margin
___________________ x stock price
1 - maintenance
Ex:
1 - .5
_______ x $75
1 - .25
What’s deductible for SE, partners, and 2% owners?
Medical ins
Dental ins
LTC ins
Disability Ins
All EXCEPT disability ins. DI CANNOT be deductible.
Blue sky = ?
Who should be registered under blue sky?
Blue sky = state level. All issuers/reps/agents/non-exempt must be registered except municipal and treasury.
Fed’s actions
DORM
Discount rate
Open mkt operations
Reserved req
Margin req
