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25 Cards in this Set
- Front
- Back
Dividend yield
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The amount of dividends received per share of stock owned, expressed as a percentage of the value of the investment at the beginning of the period.
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Percentage gain
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The capital gain or loss based on the change in the valu of the investment from the beginning of the year to the end of the year expressed as a percentage of the value of the investment at the beginning of the period.
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Percentage total return
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The total of the dividend received and the capital gain for the period expressed as a percentage of the value of the investment at the beginning of the period.
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Market index
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A statistic reflecting the composit value of a selection of securities.
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Market risk or systematic risk
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Risk that is common to the overall market or a specific market segment and that therefore cannot be eliminated by diversification.
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Company-specific risk or unsystematic risk
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Risk that affects a specific company of a small group of companies.
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Credit risk
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The risk that a debtor will not repary the amount owed.
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Liquidity risk
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The risk that an asset cannot be sold on short notice without incurring a loss.
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Variance
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A measure of the deviation from the mean of each variable in a data set.
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Standard deviation
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The average of the differences (deviations) between the values in a distribution and the expected value (or mean) of that distribution.
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Coefficient of variation
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A distribution's standard deviation divided by its mean or expected value.
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Value at risk
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A measure of potential dollar losses from an unlikely adverse event affecting an investment portfolio in an otherwise normal market environment
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Portfolio optimization
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In the case of stocks, the arrangement of a stock portfolio so that risks are minimized and rates of return are maximized
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Risk-return trade-off
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The tendency for the potential return to increase ad risk increases
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Diversification
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In the context of an investment portfolio, the process of reducing a portfolio's company-specifoc risk by investing in an array of financial assets
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Correlation coefficient
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A statiscal measure, ranging from +1 to -1, indicating the degree to which two variables' movements are associated
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Beta
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A measure of a stock's volatility relative to that of the market
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Risk premium
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The amount of compensation in excess of the risk-free return needed to induce an investor to accept a risk
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Efficent frontier
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The collection of securities portfolio combinations that generate the highest expected return for a given level of risk or that have the lowest risk for a given expected return
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Capital asset pricing model (CAPM)
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A method of pricing securities based on the relationship between risk and return
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Security market line (SML)
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The relationship between expected return and beta.
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Cash matching
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The process of precisely matching the maturity value of an investment with the amount of expected loss payment
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Reinvestment risk
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The uncertainty about the rate at which periodic interest payments can be reinvested over the life of an investment
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Duration
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In the context of bonds, a measure of the number of years required to recover the true cost of a bond, considering the present value of all coupon and principal payments to be received in the future
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Portfolio immunization
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The process of matching investment and liabilty duration.
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