Let’s now look at how to calculate the risk of the portfolio. The risk of a portfolio is measured using the standard deviation of the portfolio. However, the standard deviation of the portfolio will not be simply the weighted average of the standard deviation of the two assets. We also n...
The value of a stock portfolio varies from day to day. This is called volatility and it is a form of risk. Statisticians have worked out a way to measure the volatility called the “standard deviation,” which measures how spread out (or dispersed) the numbers are in a set of data. Th...
This article describes two methods of calculating the return of a portfolio. The first method is a sum of the individual parts. The second method uses an approximation equation that compares the total market value of all holdings at the end of the period to the total market value of all ...
Liquidity premium: Some bonds offer this, and it is meant to offset the inconvenience of not being able to sell the bond easily. Stocks are said to have a "liquid" market since you can simply hit a button and sell a stock at any given time for market value. The same cannot be said...
How to Calculate Portfolio Weight You may want to look at your balance to see whether your investments are heavily weighted in one or two areas. To do this, you'll need to know the total value of your portfolio, as well as the value of each investment you have within that portfolio. ...
Formula to Calculate Alpha of a Portfolio Alpha is an index that is used for determining the highest possible return concerning the least amount of risk, and according to the formula, alpha is calculated by subtracting the risk-free rate of the return from the market return and multiplying the...
Do a Simple Calculation A simple way to calculate your portfolio value is to look at its current market value (without considering fees and taxes). If you own 300 shares of a stock that's currently at $45, that stock has a market value of $13,500. If you have a cert...
Chapter 02 How to Calculate Present Values - Test Bank For:02章如何计算现值测试银行 Chapter 02 How to Calculate Present Values ? Multiple Choice Questions ? 1.?The present value of $100 expected in two years from today at a discount rate of 6% is:? A.?$116.64 B.?$108.00 C.?$100.00...
Value at Risk (VaR) is a measurement showing a normal distribution of past losses. The measurement is often applied to an investment portfolio for which the calculation gives a confidence interval about the likelihood of exceeding a certain loss threshold. VaR is one of the most widely known me...
Value at Risk (VaR) has been called the "new science ofrisk management," and is a statistic that is used to predict the greatest possible losses over a specific time frame. Commonly used by financial firms and commercial banks ininvestment analysis, VaR can determine the extent and probabiliti...