CFA ALL > Chapter 6 > Flashcards

Chapter 6 Flashcards

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1
Q

Continuously Compounded Returns
Pt

A
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2
Q

Continuously Compounded Returns
e ^ Rcc

A
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3
Q

Continuously Compounded Returns
Natural Log
Rcc

A

Natural Log is inverse of exponential function.

Rcc = LN (Pt / Po)

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4
Q

Price Relative
HPR
Rcc

A
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5
Q

Identically Distributed

A

Returns are stationary, meaning the mean and variance do not change over time

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6
Q

Independently Distributed

A

Past returns are not useful for predicting future returns.

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