holding period return - correct answer (ending value-beginning value) / beginning value OR
(Ending value / beginning value) - 1
,time-weighted rate of return - correct answer The compound rate of growth of one unit of currency
invested in a portfolio during a stated measurement period; a measure of investment performance that
is not sensitive to the timing and amount of withdrawals or additions to the portfolio. Also a geometric
mean return
money weighted return - correct answer IRR based on cash inflows and outflows
Bank discount yield - correct answer RBD = D/F * 360/t Where: D = dollar discount from face value, F =
face value, T = days until maturity, 360 = days in a year
US T-Bills are quoted on a bank discount basis
holding period yield - correct answer Holding Period Return = (ending value/beginning value) - 1
EAY^t/365 - 1
total return an investor earns between the purchase date and the sale or maturity date
effective annual yield - correct answer EAY = (1 + HPY)^365/t - 1 where t is days to maturity. Remember
that EAY > bank discount yield, for three reasons: (a) yield is based on purchase price, not face value, (b)
it is annualized with compound interest (interest on interest), not simple interest, and (c) it is based on a
365-day year rather than 360 days. Be prepared to compare these two measures of yield and use these
three reasons to explain why EAY is preferable.
Descriptive statistics - correct answer used to summarize the important characteristics of large data sets
, Inferential statistics - correct answer a sample, pertain to the procedures used to make forecasts,
estimates or judgement about a large set of data
nominal scale / categorical - correct answer level of measurement with least information, observations
are classified or counted with no particular order
ordinal scale - correct answer level of measurement, categorized with respect to specified characteristic
interval scale - correct answer provides relative ranking like ordinal scale plus assurance that the
difference between the scale values are equal e.g. temperature
however measurement of 0 does not necessarily indicate the total absence of what we are measuring -
e.g. 30 c is not three times as hot as 10 c
ratio scale - correct answer ratio scales provide ranking and equal difference between scale values and a
true zero point as the origin e.g. measurement of money
difference between parameter and sample statistic - correct answer parameter is used for population
sample statistic is used for sample
modal interval - correct answer For any frequency distribution, the interval with the greatest frequency
relative frequency - correct answer dividing the absolute frequency of reach return by the total number
of observations
mode - correct answer the value that occurs most frequently in a data set
unimodal: one value that happens most frequent
bimodal, trimodal: two or three values happen the most frequent
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