Arithmetic average has strengths and weaknesses Arithmetic average is the most popular measure of central tendency and (the reason for its popularity is that) it is the easiest one to calculate. However, like every other statistical measure, arithmetic average has strengths and weaknesses and it is more suitable in some situations than in others. The … Read more
Common features of alternative investments Besides being increasingly popular in the last decades, alternative investments have proved to have significant benefits for long-term portfolios of various types of investors. Nevertheless, in order to successfully invest in alternative assets and take advantage of their often high returns, controlled risk, and diversification benefits, you should know the … Read more
Value weighted indices: one of the 3 index construction methods Value weighting (also known as market cap weighting or capitalization weighting) is one of the three commonly used methods for stock index calculation (the other two methods are price weighting and equal weighting). Value weighted stock indices are currently the most popular of the three … Read more
Equity index weighting methods Stock indices perform important functions in the global investing universe. They serve as benchmarks of equity markets and therefore as good indicators of economic situation and investor sentiment. Stock indices are widely used in analyses and investment decision making. There are three common methods of stock index construction: there are price … Read more
VAR is widely used and has both advantages and disadvantages Value At Risk, known as VAR, is a common tool for measuring and managing risk in the financial industry. While there are several advantages which have led to big popularity of VAR, anybody using it should also understand the limitations of Value At Risk as … Read more
VAR is popular and has both advantages and limitations Value At Risk is a widely used risk management tool, popular especially with banks and big financial institutions. There are valid reasons for its popularity – using VAR has several advantages. But for using Value At Risk for effective risk management without unwillingly encouraging a future … Read more
Alternative assets are not available to everybody Alternative investments are very diverse. You can choose from various styles of hedge funds, private equity funds, real estate, commodity investing vehicles, or even more exotic assets like a tropical forest or a highway bridge. Nevertheless, if you only have a few thousand dollars to invest, the scale … Read more
Alternative Investments Alternative investments have been growing in popularity in the last few decades: an increasing number of investors include hedge funds, private equity, or commodities in their portfolios. Compared to traditional investments like stocks and bonds, alternative assets have some different characteristics. Some of the unique features make the decision making and investment management … Read more
Non-normal returns of alternative investments and skewness Non-normal return distribution is one of the most common features of alternative investments. With alternative investments we mainly look at skewness of the return distribution, which compares probabilities and sizes of profits to those of losses. A positively skewed return distribution shows small frequency of very big profits, … Read more
Median definition Like arithmetic average, geometric average, or mode, median is one of the measures of central tendency of a population, a sample, or a probability distribution. Median is the value which divides a data set in two halves – one with values lower than the median and the other with the higher values. Median … Read more
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