Week 2 Part 1 (on MCQ 1) Flashcards
1
Q
Return (definition)
A
Reward for investing
2
Q
Components of total return
A
Yield- interest or dividends
Capital gain/loss- change in assets price
3
Q
Total return equation
A
(Cash flows + change in price)/originial price
(Total dividends +(price at end-price at start))/price at start
4
Q
Geometric mean (how to calculate)
A
Add all values, nth root answer. N being number of values
5
Q
Types of risk (8)
A
- interest rate risk
- market risk
- inflation risk
- business risk
- financial risk
- liquidity risk
- currency risk
- country risk
6
Q
What is used to calculate risk?
A
Standard deviation
7
Q
How do you find standard deviation?
A
Square root of varience
Varience = sum of (each value - mean)^2/n-1
8
Q
Risk premium (definition)
A
Additional return earned (or expected) for additional risk undertaken by an investor
