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Portfolio Management Chapter 6 Vocab
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Terms in this set (15)
Yield
the income component of a security's return
Capital Gain (Loss)
the change in price on a security over some period
Total Return (TR)
percentage measure relating all cash flows on a security for a given time period to its purchase price
Relative Return (RR)
the total return for an investment for a given period stated on the basis of 1.0
Cumulative Wealth Index
cumulative wealth over time, given an initial wealth and a series of returns on some asset
Currency Risk (Exchange Rate Risk)
the risk of an adverse impact on the return from a foreign investment as a result of movements in currencies
Geometric Mean
the compound rate of return over time
Nominal Return
return in current dollars, with no adjustment for inflation
Real Returns
Nominal (dollar) returns adjusted for inflation
Interest Rate Risk
the variability in a security's returns resulting from changes in interest rates
Market Risk
the variability in a security's returns resulting from fluctuations in the aggregate market
Variance
a statistical term measuring dispersion - the standard deviation squared
Standard Deviation
a measure of the dispersion in outcomes around the expected value
Risk Premium
that part of a security's return above the risk-free rate of return
Equity Risk Premium
the difference between stock returns and the risk-free rate
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