Risk attributes Flashcards
The concept of risk differs from uncertainty in that risk
deals with the unknowns that have measurable probabilties
Risk can involve
loss or gains
When calculating a sample variance to estimate the variance of an entire population, it is necessary to
subtract 1 from the total number of data points
Covariance is best described as the
deviation from the mean of two variables
An investor is concerned about exchange rates. Currency risk can be mitigated by
purchase Yankee bonds
Log returns used in finance modeling normal distributions utilize which risk measures
standard deviation
Mathematically, standard deviation is defined as the
square root of variance
A statistical measure of the dispersion of a stock is most commonly known as
volatility
a measure of volatility
standard deviation
The expected value of the difference between the variable and its mean squared is known as
variance
Variance is defined as the
expected value of the difference between variable and its mean squared
T bills are
zero-coupon bonds
A consultant reviewing the use of standard deviation most likely tells an investor that standard deviation is a
useful measure to measure confidence in statistical conclusions
is a central quantity in statistics
variance
Covariance is calculated by
multiplying the correlation between two variables by the standard deviation of each variable
