Unit 23 Flashcards
1
Q
Sharpe Ratio
A
Known as risk premium
Measures risk adjusted return.
Actual Return - RF / Std Dev
Std deviation is systematic and unsystematic risk, so beta not needed.
2
Q
IRR Notes
A
- preferred method of measuring returns for DPPs
- takes into consideration the time value of money.
- used to compute YTM
3
Q
Time-weighted return
Dollar-weighted return
A
Time-weighted returns - does not reflect IRR. Calculated without regard to future cash flows. Performance of an investment over time.
Dollar-weighted returns - reflects IRR. Considers subsequent contributions and withdrawals.
4
Q
Wilshire 5000
A
Broadest index
All equity securities with readily available price data.
