Term
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Definition
| the loss or gain from an investment |
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Term
1st component of return:
(income component) |
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Definition
| the direct cash received while you own the investment |
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Term
2nd component of return:
(capital gain or loss) |
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Definition
| the changing value of the asset |
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Term
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Definition
| tells you how much you get for each dollar invested |
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Term
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Definition
| protfolio based on S&P 500 |
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Term
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Definition
| portfolio composed of stock of smaller companies (smallest 20%) |
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Term
| Long term corporate bonds |
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Definition
| portfolio of high quality bonds with 20 years to maturity |
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Term
| long term US government bonds |
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Definition
| governmnet bonds with 20 years to maturity |
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Term
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Definition
| based on Treasury bills with one month maturity |
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Term
consumer Price Index
(CPI) |
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Definition
| year-to-year percentage in consumer price index |
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Term
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Definition
| excess return required from an investment in a risky asset over that required from a risk-free investment |
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Term
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Definition
| difference between two returns |
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Term
| first lesson from capital market history |
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Definition
| there is a reward for bearing the risk |
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Term
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Definition
| average squared difference between the actual return and the average return |
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Term
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Definition
| the positive squared root of the variance |
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Term
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Definition
| symmetric, bell-shaped frequency distribution that is completely defined by its avg and standard deviation |
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Term
| the second lesson from capital market history |
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Definition
| the greater the potential reward, the greater is the risk |
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Term
geometric average return
(average return per year) |
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Definition
| the average compound return earned per year over a multilayer period |
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Term
arithmetic average return
(return in an average year) |
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Definition
| the return earned in an average year over a particular period |
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Term
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Definition
| market which security prices reflect available info |
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Term
| Efficient Markets Hypothesis (EMH) |
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Definition
| the hypothesis that actual capital markets, such as the NYSE are efficient |
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Term
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Definition
| all info of every kind is reflected in stock prices |
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Term
semistrong efficiency
(most contraversal) |
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Definition
| all public info is reflected in the stock price |
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Term
weak form efficiency
(at a minimum) |
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Definition
| current price of a stock reflects its own past prices |
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