FIN 420 EXAM 2 WORKING CAPITAL OPTIMIZATION SHORT TERM FINANCING AND LIQUIDITY ANALYSIS FINAL PAPER

FIN 420 EXAM 2 WORKING CAPITAL
OPTIMIZATION SHORT TERM FINANCING
AND LIQUIDITY ANALYSIS FINAL PAPER

●● risk free rate
Answer: What is the rate of return that can be earned with CERTAINTY
because of no risk?


●● market risk premium (expected return)
Answer: Market Rate(return) - Risk Free Rate (risk free securities)


●● excess return (alpha)
Answer: What is the rate of return in excess of the risk-free rate,
manager's ability to "beat the market?


●● variance
Answer: A measure of spread within a distribution (the square of the
standard deviation).


●● beta
Answer: The Treynor ratio (mean variance) measures risk with...

, ●● symmetric returns
Answer: When is standard deviation a good measure of risk compared to
the bell curve?


●● the fisher effect
Answer: (1+nominal)=(1+real)(1+inflation)


●● value at risk(tail risk)
Answer: What is a ratio used as a prospecting tool to determine the
MAXIMUM LOSS over a future period of time given an assigned level
of probability VALUE?


●● Sharpe Ratio
Answer: What is a formula of portfolio performance that describes how
well an asset's return compensates INVESTORS for the RISK taken in
terms of standard deviation?


●● Treynor Ratio
Answer: What is a measure of a portfolio in regards to EFFICIENCY of
utilizing the relationship between annualized risk- adjusted return and
risk? (beta)


●● capital allocation