CAIA Exam 2024 Questions and Answers 100% Accurate(GRADED A+)

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), it measures the symetry of a reutnr dist. around its mean. long tail to right means small losses and larger gains, and long tail to left indicates larger losses and smaller gains kurtosis - ANSWER-the fourth central moment of a distribution; distributions where large proportion of the observed values lie towards the extremes are known as "platykurtic" or display positive kurtosis. "leptokurtic" is where values are clustered near the mean, displaying negative kurtosis. normal dist. is mesokurtic. absolute return - ANSWER-the primary goal of the manager; achieving a target rate of return, whatever happens to the market arbitrage - ANSWER-simultaneous buy and sale of the related securities that are mispriced compared to each other. Managers use mathematical, fundamental, and technical