CFA Study Session 2

Mode, median, mean.

most frequently occuring number

middle number

average

(Return Portfolio-Risk Free Return)/Standard Deviation

(Discount/face)x( 360/days to maturity)

(End value/ Beginnning Value)-1

(1+HPY)^365/days-1

HPYx(360/days to maturity)

(1.01*1.05*.95)^(1/3)

Average Cost per share over time in constant dollar amounts.

2/
(1/20+1/25)=22.22

average of squared deviations from the mean

Square root of varience

what % of oberservations must lie withing k standard deviations of the mean?

min%= 1-(1/k^2)

measure of risk per unit of return. lower the better

CV=standard deviation/mean

Excess return per unit of risk...more the better.

Sharpe: (Rp-Rf/Std. dev)

more peaked with more extreme outliers (kurtosis>3)

measure of how two variables move togehter

measur of the linear relationship between two variables
Correlation= CovA, B/( Std Dev A, Std Dev B)

According to the central limit theorem, the mean of the distribution of sample means will be equal to the population mean. n > 30 is only required for distributions of sample means to approach normal distribution.

parameter is any descriptive measure of a population characteristic.

he bank discount yield is computed by the following formula, r = (dollar discount / face value) × (360 / number of days until maturity)

Use the formula for a binomial random variable to calculate the answer to this question. We will define "success" as the team winning a game. The formula is:

p(x) = P(X = x) = [number of ways to choose x from n] × px × (1 - p)n-x,
where [number of ways to choose x from n] = n! / [(n - x)! × x!].

number of ways to choose x from n] = n! / [(n - x)! × x!].

In stratified random sampling, we first divide the population into subgroups based on some relevant characteristic(s) and then make random draws from each group.

(1 + HPY)365/t) − 1

The probability distribution may or may not reflect reality. But the probability distribution must list all possible outcomes, and probabilities can only have non-negative values.

((1000-purchase price)/purchase price)*(365/days to maturity)