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SU6- Advanced Topics - Coggle Diagram
SU6- Advanced Topics
Basics of data
Mean
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Geometric
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Thus, suitable measure for ROI over multiple periods (like portfolio performance)
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Distribution
Probability
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Denotation- p(x), where x is btw 0-1
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Normal
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Characteristics
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Outcomes- can get infinitesimally small, but never zero
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Data types
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Cross-sectional- observations from multiple perspective at 1 point in time e.g. observing multiple firms at a specific year-end
Longitudinal- repeated observations on 1 entity over a time period e.g. continuously observing 1 firm throughout th year
Panel- observation of 1 characteristic of multiple entities over a time period e.g. observing 1 variable in multiple firms throughout 1 year
WACC
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Common discount rate- firm's required (min.) rate of return; lenders, equity holders expected return rate/opportunity cost
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Capital market
Allocation
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Key
All follow linear equation, Y = MX + C
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Efficient frontier- set of optimal portfolios with highest expected return for a given level of risk
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Asset prices
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Beta
Stock volatility relative to market return (includes all, both systematic and non-systematic risk) i.e. return sensitivity
Covariance- stock's return relative to market's return changes i.e. if market returns go up by 1%, how much does stock's return move (direction + magnitude)?
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