What Is Risk and Return?
The common measure is standard deviation: how far values sit from their average; a simpler picture is the range.
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1.What does risk usually mean in finance?
The common measure is standard deviation: how far values sit from their average; a simpler picture is the range.
2.What does expected return mean?
In the coin-flip account the expected end was about 110, yet nearly four in ten runs ended below 100.
3.Marge's years are 4, 5, 5, 5 and 6 percent. What is her average?
The sum is 25 and 25 divided by 5 is 5; Leo's years also sum to 25, so both averages are 5 percent.
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Sources (4)
- Modern portfolio theory (Wikipedia, englisch)
- Standard deviation (Wikipedia, englisch)
- Eigene Rechnung: zwei synthetische Ergebnisreihen (jaehrliche Veraenderung in Prozent, 5 Jahre)
- Eigene Rechnung aus Folge 095: Muenzwurf-Konto (100 Start, +10/-8 Prozent, 10 Jahre)
Education only. Not financial advice.