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NCFM Trainning - CM Chapter 6

# NCFM Trainning - CM Chapter 6

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09/10/2010

pdf

text

original

Concepts

Time

Value

of

Moneyn erstan ng

nanc a

tatements
Equity

Research

Elementar Statistical Concets
Geometric Mean
X
i
/ N,
where i =1,2,3…n
(1+r
1
)* (1+r
2
)* (1+r
3
)* ….(1+x
n
)
n
aranceanar evaon
σ
2
= [
(P
i
* (xi –X)
2
) ]
Positive sq root of variance
,
σ
Coefficient of VariationCovariance
(
σ
/ X) * 100Cov (x,y) = {
(X
i
X) (Y
i
Y) } / N
Correlation coefficientNormal Distribution
=*

,
x

y
x
σ

What is the average rate of return of XYZ if the returns during the,
Average Return = (20% + 25% + 45%) / 3= 35%

What is the expected return of XYZ if it has the probability of Probability (%)Return(%)2010

30125015
(Since probability is assumed as a percentage, no need to divide by N)
Expected return = {(20%*10%) + (30%*12%) + (50%*15%) }= 1300= 13.10%

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