Beruflich Dokumente
Kultur Dokumente
B
2. True
3. B
4. Annuity
5. True
6. D
7. True
8. A
9. True
10.D
11.C
12.C
13.True
14.True
15.C
16.D
17.D
18.True
19.False
20.D
21.B
22.B
23.C
24.F
25.True
26.True
27.Optimal
28.True
29.A
30.C
1. The principle that potential return rises with an increase in risk. Low levels
of uncertainty (low-risk) are associated with low potential returns, whereas
high levels of uncertainty (high-risk) are associated with high potential
returns. According to the risk-return tradeoff, invested money can render
higher profits only if it is subject to the possibility of being lost. Because of
the risk-return tradeoff, you must be aware of your personal risk tolerance
when choosing investments for your portfolio. Taking on some risk is the
price of achieving returns; therefore, if you want to make money, you can't
cut out all risk.
Statistical measures of risk are:
Correlation Coefficient: A statistic gauging the relationship between two
variables. The range is from -1 to +1. -1 indicates inverse correlation, 0
indicates no relationship between the variables and +1 indicates complete
correlation between them.
Coefficient of Determination (R2): A statistical measure which one arrives
at by squaring the correlation coefficient. This statistic describes the
degree of variability of a dependent variable that is explained by changes
in the independent variable.
Coefficient of Variation: The measure of dispersion of a probability
distribution. The standard deviation divided by the mean. In finance, the
ratio measures the amount of risk per unit of mean return and is helpful in