Measuring Return, Volatility, and Correlation
After completing this reading, you should be able to: Calculate, distinguish, and convert between simple and continuously compounded returns. Define and distinguish between volatility, variance rate, and implied volatility. Describe how the first two moments may be insufficient to describe…
Asset Class Allocation
Three Super Classes An asset class is a group of assets that all share some common elements. Asset classes help organize investment portfolios into separate components. We can start with the broadest sense of the word and divide assets into…
Approaches to Asset Allocation
Portfolio managers rely on one of three frameworks for analyzing and managing their portfolios. The three approaches below have advantages and disadvantages, which the analysts and managers must know to make prudent investment decisions. Asset-only Approach This approach considers only…
