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Sharpe Ratio Definition Example | InvestingAnswers How to Calculate the Sharpe Ratio -- Formula Example The Sharpe ratio is a ratio of return versus risk The formula is: (Rp-Rf) ?p where: Rp = the expected return on the investor's portfolio Rf = the risk-free rate of return ?p = the portfolio's standard deviation, a measure of risk For example, let's assume that you expect your stock portfolio to return 12% next year If returns on risk
Markowitz Efficient Set Definition Example | InvestingAnswers The efficient set is the result of an evaluation of the expected returns, standard deviation and the covariances of a set of securities An example appears below Note how the Markowitz efficient set allows investors to understand how a portfolio’s expected returns vary with the amount of risk (standard deviation) taken
Roys Safety-First Rule Definition Example | InvestingAnswers How Does Roy's Safety-First Rule Work? The mechanics of the formula are simple: Input the investor's minimum required return, the expected return for the portfolio, and the standard deviation for the portfolio
CAGR | Meaning, Formula Definition | InvestingAnswers CAGR is simply a way to calculate the internal rate of return, and doesn’t incorporate or consider periodic returns’ variability or standard deviation CAGR Formula The CAGR formula provides a growth rate in the form of a percentage
Safety-First Rule Definition Example | InvestingAnswers How Does the Safety-First Rule Work? The mechanics of the formula are simple: Input the investor's minimum required return, the expected return for the portfolio, and the standard deviation for the portfolio By using this formula for various portfolio scenarios (i e , using different investments or using different weightings of asset classes), investors compare portfolio choices based on the
Return on Investment (ROI) Calculator | InvestingAnswers Return on investment (ROI) is one of the most important metrics in finance It’s the standard measure of investment performance, whether that means determining the return on stocks, mutual funds, or an asset used in a business Because it’s such an important metric, we are providing this Return on Investment (ROI) Calculator to make that determination easy for you to calculate