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Value-of-Final-Output and Sum-of-Value-Added Methods of Calculating GDP
There are two approaches used in the calculation of the Gross Domestic Product (GDP). The first one is the income approach. This method measures GDP as a summation of all income generated in the economy in a given year. The…
Relationship between Normal Distribution and Lognormal Distribution
A variable \(X\) is said to have a lognormal distribution if \(Y = ln(X)\) is normally distributed, where “ln” denotes the natural logarithm. In other words, when the logarithms of values form a normal distribution, we say that the original…
Shortfall Risk, Safety-first Ratio, and Identification of an Optimal Portfolio Using Roy’s Safety-first Criterion
Shortfall risk refers to the probability that a portfolio will not exceed the minimum (benchmark) return that an investor has set. In other words, it is the risk that a portfolio will fall short of the level of return an…
Selecting Data Visualization Types
Guide to Selecting Visualization Types For numerical data, use a histogram, frequency polygon, or cumulative distribution chart. For category-based data, use a bar chart, tree-map, or heat map. For unstructured data, use a word cloud. For displaying relationships between two…
Alternative Mean Definitions for Different Investment Problems
Suitability of Alternative Mean Definitions for Different Investment Problems $$ \begin{array}{l|l} \textbf { Type of Data } & \textbf { Mean to Use } \\ \hline \text { Single period data } & \text { Arithmetic mean } \\ \hline…
