CAIA questions with correct answers
CAGR - Answer compound annual growth rate annualized return - Answer (1+HPR)^number of holding periods in one year - 1 multiple hedge fund aggregation - Answer equal weighted approach, asset weighted, and arbitrary weight approach Performance index - Answer R index = Sum of wi * Ri in the case of multiple fund aggregations, severals prefer reporting median return - Answer you know what the median is---the fact that outliers are automatically excluded from the calculation makes the median more robust than the average arithmetic average - Answer yields higher results than geometric average, but should only be used when the objective is to measure a one period mean return geometric average - Answer harder to calculate, and should be used when the goal is to obtain the mean return over several successive periods z score - Answer target return - mean return/standard deviation; used to compare values from different dat sets (differnt mean and volatility) or to compare values within the same data set. Basically, it is the number of SDs by which a given value is below or above the mean. skewness - Answer the third central moment of a distribution (first being the mean and the variance being the second moment
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