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Flashcard 1464617798924

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#conversation-tactics
Question
Chapter 9. How to deflect [...]
Answer
and roll with the punches.

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Chapter 9. How to deflect and roll with the punches.

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Flashcard 1480013778188

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#power-of-habit
Question
What happened to the rats brain the first time it needed to find the cheese?
Answer
All kinds of places in the brain fired up specially the basal ganglia

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Flashcard 1603697511692

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#excel-stuff
Question
Cual es la formula para un hipervinculo a una hoja en el mismo libro?
Answer
# 'El nombre de la hoja' !A1

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Flashcard 1621034405132

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#cashflow-statement
Question
FCF accounts for [...] and dividend payments, which are essential to the ongoing nature of the business.
Answer
capital expenditures

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Subject 3. Cash Flow Statement Analysis
CFO. CFO does not include cash outlays for replacing old equipment. Free Cash Flow (FCF) is intended to measure the cash available to a company for discretionary uses after making all required cash outlays. <span>It accounts for capital expenditures and dividend payments, which are essential to the ongoing nature of the business. The basic definition is cash from operations less the amount of capital expenditures required to maintain the company's present productive capacity. &#







Flashcard 1621041483020

Tags
#cashflow-statement
Question
[...]: Cash available to shareholders and bondholders after taxes, capital investment, and WC investment.
Answer
Free Cash Flow to the Firm (FCFF)

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Subject 3. Cash Flow Statement Analysis
3; The basic definition is cash from operations less the amount of capital expenditures required to maintain the company's present productive capacity. Free cash flow = CFO - capital expenditure <span>Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the com







Flashcard 1621274529036

Tags
#cashflow-statement
Question
The add-back of net non-cash expenses is usually positive or negative?
Answer
Positive

because depreciation is a major part of total expenses for most companies.

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Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621276364044

Tags
#cashflow-statement
Question
The add-back of net non-cash expenses is usually positive because [...]
Answer
depreciation is a major part of total expenses for most companies.

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Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621291830540

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#reading-6-time-value-of-money
Question
Why is money worth more today than in the future?
Answer
This is because the $1 today can be invested to earn interest immediately.

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Subject 1 Time Value of Money and Interest Rates
The time value of money (TVM) refers to the fact that $1 today is worth more than $1 in the future. This is because the $1 today can be invested to earn interest immediately. The TVM reflects the relationship between present value, future value, time, and interest rate. The time value of money underlies rates of return, interest rates, required rates of retu







Flashcard 1621294189836

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#reading-6-time-value-of-money
Question
The TVM reflects the relationship between [...] , future value, time, and [...] .
Answer
present value

interest rate

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Subject 1 Time Value of Money and Interest Rates
The time value of money (TVM) refers to the fact that $1 today is worth more than $1 in the future. This is because the $1 today can be invested to earn interest immediately. The TVM reflects the relationship between present value, future value, time, and interest rate. The time value of money underlies rates of return, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between







Flashcard 1621296549132

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#reading-6-time-value-of-money
Question
There are [...] ways to interpret interest rates
Answer
3

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Subject 1 Time Value of Money and Interest Rates
interest rate. The time value of money underlies rates of return, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between time, cash flow, and interest rate. <span>There are three ways to interpret interest rates: Required rate of return is the return required by investors or lenders to postpone their current consumption. Discount rate is the rate used to discount future cash flows







Flashcard 1621298908428

Tags
#reading-6-time-value-of-money
Question
[...] is the return required by investors or lenders to postpone their current consumption.
Answer
Required rate of return

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Subject 1 Time Value of Money and Interest Rates
n, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between time, cash flow, and interest rate. There are three ways to interpret interest rates: <span>Required rate of return is the return required by investors or lenders to postpone their current consumption. Discount rate is the rate used to discount future cash flows to allow for the time value of money (that is, to bring a future value equivalent to present value). Opportunity cost is the







Flashcard 1621303627020

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#reading-6-time-value-of-money
Question
[...] is the most valuable alternative investors give up when they choose what to do with money.
Answer
Opportunity cost

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Subject 1 Time Value of Money and Interest Rates
e return required by investors or lenders to postpone their current consumption. Discount rate is the rate used to discount future cash flows to allow for the time value of money (that is, to bring a future value equivalent to present value). <span>Opportunity cost is the most valuable alternative investors give up when they choose what to do with money. In a certain world, the interest rate is called the risk-free rate. For investors preferring current to future consumption, the risk-free interest rate is the rate of compensation







Flashcard 1621308345612

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#reading-6-time-value-of-money
Question
The [...] consists of the real rate (a pure rate of interest) and an inflation premium.
Answer
nominal cost of money

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Subject 1 Time Value of Money and Interest Rates
licate interest rates: Inflation: When prices are expected to increase, lenders charge not only an opportunity cost for postponing consumption but also an inflation premium that takes into account the expected increase in prices. <span>The nominal cost of money consists of the real rate (a pure rate of interest) and an inflation premium. Risk: Companies exhibit varying degrees of uncertainty concerning their ability to repay lenders. Lenders therefore charge interest rates that incorporate default







Flashcard 1621317782796

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#reading-6-time-value-of-money
Question
[...] occurs when the number of compounding periods becomes infinite.
Answer
Continuous compounding


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Subject 1 Time Value of Money and Interest Rates
nominal risk-free rate (real rate + an inflation premium) and a default risk premium. Compounding is the process of accumulating interest over a period of time. A compounding period is the number of times per year that interest is paid. <span>Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously. Discounting is the calculation of the present value of some known future value. Discount rate is the rate used to calculate the present value of some future cash flow. Disco







Flashcard 1621322501388

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#reading-6-time-value-of-money
Question
[...] is the rate used to calculate the present value of some future cash flow.
Answer
Discount rate

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Subject 1 Time Value of Money and Interest Rates
per year that interest is paid. Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously. Discounting is the calculation of the present value of some known future value. <span>Discount rate is the rate used to calculate the present value of some future cash flow. Discounted cash flow is the present value of some future cash flow. <span><body><html>







Flashcard 1621324860684

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#reading-6-time-value-of-money
Question
[...] is the present value of some future cash flow.
Answer
Discounted cash flow

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Subject 1 Time Value of Money and Interest Rates
ding periods becomes infinite; interest is added continuously. Discounting is the calculation of the present value of some known future value. Discount rate is the rate used to calculate the present value of some future cash flow. <span>Discounted cash flow is the present value of some future cash flow. <span><body><html>







Flashcard 1621957676300

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#reading-6-time-value-of-money
Question
Formula

EAR = [...]
Answer
(1 + periodic interest rate)m - 1

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Subject 1 Time Value of Money and Interest Rates
licate interest rates: Inflation: When prices are expected to increase, lenders charge not only an opportunity cost for postponing consumption but also an inflation premium that takes into account the expected increase in prices. <span>The nominal cost of money consists of the real rate (a pure rate of interest) and an inflation premium. Risk: Companies exhibit varying degrees of uncertainty concerning their ability to repay lenders. Lenders therefore charge interest rates that incorporate default







Flashcard 1622917909772

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#discounted-cashflow-applications
Question
is the allocation of funds to relatively long-range projects or investments.

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Flashcard 1622919744780

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#discounted-cashflow-applications
Question
Management of a company’s short-term assets.

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Flashcard 1622922366220

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#discounted-cashflow-applications
Question
The [...] of an investment is the present value of its cash inflows minus the present value of its cash outflows.

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Flashcard 1622938619148

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#discounted-cashflow-applications
Question
The discount rate that makes the present value of an investment’s costs equal to the present value of the investment’s benefits.
Answer
IRR

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Flashcard 1622941502732

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#discounted-cashflow-applications
Question
What is the IRR rule?
Answer
Projects or investments for which the IRR is greater than the opportunity cost of capital should be accepted

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Flashcard 1622943337740

Tags
#discounted-cashflow-applications
Question
The IRR rule uses [...] as a hurdle rate
Answer
the opportunity cost of capital

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Flashcard 1623556754700

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#discounted-cashflow-applications
Question

When the IRR and NPV rules conflict in ranking projects, we should take directions from [...]

Answer
the NPV rule.

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Flashcard 1623560424716

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#discounted-cashflow-applications
Question

Why should we choose the NPV rule over the IRR rule when analyzing mutually exclusive projects?

Answer
The NPV of an investment represents the expected addition to shareholder wealth from an investment.

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Flashcard 1623792160012

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#discounted-cashflow-applications
Question
The Money-Weighted rate of return is an [...] calculation.
Answer
internal rate of return

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Flashcard 1623807888652

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#discounted-cashflow-applications
Question
In the United States, the money-weighted return is frequently called the [...]
Answer
dollar-weighted return.

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Flashcard 1623815228684

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#discounted-cashflow-applications
Question
If you are an investor and you want to assess the success of your investments, which two tasks do you face?

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Flashcard 1623818636556

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#discounted-cashflow-applications
Question
The calculation of returns in a logical and consistent manner is called [...]

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Flashcard 1623824403724

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#discounted-cashflow-applications
Question
Accurate performance measurement provides the basis for your second task, [...] .

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Flashcard 1623830695180

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#discounted-cashflow-applications
Question
The return that an investor earns during a specified holding period; a synonym for total return.
Answer
Holding period return

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Flashcard 1623834103052

Tags
#discounted-cashflow-applications
Question
HPR = [...]
Answer
(P1P0 + D1)/P0

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Flashcard 1623849307404

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#discounted-cashflow-applications
Question
Two of the measurement tools available for portfolio perfomance measure are the [...] measure and the [...] measure.
Answer
money-weighted rate of return

time-weighted rate of return

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Flashcard 1624281058572

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#discounted-cashflow-applications
Question
An investment measure that is not sensitive to the additions and withdrawals of funds is the [...]
Answer
time-weighted rate of return.

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Flashcard 1624283155724

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#discounted-cashflow-applications
Question
What is the preferred performance measure in the investment management industry?
Answer
time-weighted rate of return

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Flashcard 1624287350028

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#discounted-cashflow-applications
Question
The [...] rate of return is not affected by cash withdrawals or additions to the portfolio.

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Flashcard 1624656448780

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#discounted-cashflow-applications
Question
The [...] is the market for short-term debt instruments (one-year maturity or less).
Answer

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Flashcard 1624658283788

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#discounted-cashflow-applications
Question
[...] pay interest as the difference between the amount borrowed and the amount paid back.

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Flashcard 1624660380940

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#discounted-cashflow-applications
Question
The [...] of a T-bill is the amount the US government promises to pay back to a T-bill investor.
Answer

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Flashcard 1626637208844

Tags
#reading-7-discounted-cashflows-applications
Question
The IRR assumes that all project cash flows can be reinvested to earn [...]
Answer
a rate of return exactly equal to the IRR itself.

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Subject 1. NPV and IRR
le. Reinvestment The IRR is intended to provide a single number that represents the rate of return generated by a capital investment. As such, it is an easy number to interpret and understand. However, calculation of <span>the IRR assumes that all project cash flows can be reinvested to earn a rate of return exactly equal to the IRR itself. In other words, a project with an IRR of 6% assumes that all cash flows can be reinvested to earn exactly 6%. If the cash flows are invested at a rate lower than 6%, the realized return







Flashcard 1626644286732

Tags
#reading-7-discounted-cashflows-applications
Question
Why is Timing of cashflows an issue with IRR?

Answer
Since IRR supposes the reinvestment of the funds at the same rate the distance between cashflows can make a substantial difference

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Subject 1. NPV and IRR
usive projects of greatly differing scale: one that requires a relatively small investment and returns relatively small cash flows, and another that requires a much larger investment and returns much larger cash flows. <span>Timing The other situation in which IRR is likely to contradict NPV is when there are two mutually-exclusive projects whose cash flows are timed very differently: one that receives its







Flashcard 1626650053900

Tags
#reading-7-discounted-cashflows-applications
Question
When analyzing rates of return, our starting point is the [...]
Answer
holding period return (HPR).

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Subject 2. Holding Period Return
When analyzing rates of return, our starting point is the total return, or holding period return (HPR). HPR measures the total return for holding an investment over a certain period of time, and can be calculated using the following formula:







Flashcard 1626652413196

Tags
#reading-7-discounted-cashflows-applications
Question
Holding period return (HPR) is also called...
Answer
total return, or

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Subject 2. Holding Period Return
When analyzing rates of return, our starting point is the total return, or holding period return (HPR). HPR measures the total return for holding an investment over a certain period of time, and can be calculated using the following formula:







Flashcard 1626654772492

Tags
#reading-7-discounted-cashflows-applications
Question
[...] measures the total return for holding an investment over a certain period of time
Answer
HPR

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Subject 2. Holding Period Return
When analyzing rates of return, our starting point is the total return, or holding period return (HPR). HPR measures the total return for holding an investment over a certain period of time, and can be calculated using the following formula: P t = price per share at the end of time period t P (t-1) = price per share at the







Flashcard 1626657131788

Tags
#has-images #reading-7-discounted-cashflows-applications
Question
Holding period return formula

Answer

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Subject 2. Holding Period Return
When analyzing rates of return, our starting point is the total return, or holding period return (HPR). HPR measures the total return for holding an investment over a certain period of time, and can be calculated using the following formula: P t = price per share at the end of time period t P (t-1) = price per share at the end of time period t-1, the time period immediately







Flashcard 1631884021004

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#reading-7-discounted-cashflows-applications
Question
The dollar-weighted rate of return is essentially the [...] on a portfolio.
Answer
internal rate of return (IRR)

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Subject 3. Dollar-weighted and Time-weighted Rates of Return
The dollar-weighted rate of return is essentially the internal rate of return (IRR) on a portfolio. This approach considers the timing and amountof cash flows. It is affected by the timing of cash flows. If funds are added to a portfolio when the portfolio is performing well (poorly),







Flashcard 1631928585484

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#reading-7-discounted-cashflows-applications
Question
The time-weighted rate of return measures the [...] of $1 initial investment over the measurement period.
Answer
compound growth rate

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Subject 3. Dollar-weighted and Time-weighted Rates of Return
rs the timing and amountof cash flows. It is affected by the timing of cash flows. If funds are added to a portfolio when the portfolio is performing well (poorly), the dollar-weighted rate of return will be inflated (depressed). <span>The time-weighted rate of return measures the compound growth rate of $1 initial investment over the measurement period. Time-weightedmeans that returns are averaged over time. This approach is not affected by the timing of cash flows; therefore, it is the preferred method of performance measurement. &#13







Flashcard 1632046812428

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#reading-7-discounted-cashflows-applications
Question
When Calculating the time-weighted rate of return:
    If the measurement period > 1 year, [...]

    Answer
    take the geometric mean of the annual returns.

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    Subject 3. Dollar-weighted and Time-weighted Rates of Return
    For the second year, HPR 2 : (280 + 20)/300 - 1 = 0. Calculate the time-weighted rate of return: If the measurement period < 1 year, compound holding period returns to get an annualized rate of return for the year. <span>If the measurement period > 1 year, take the geometric mean of the annual returns. <span><body><html>







    Flashcard 1632835865868

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    Bank discount yield is not a meaningful measure of the return on investment because:
    • It is based on [...] , not on the [...] .
    • It is annualized using a 360-day year, not a 365-day year.
    • It annualizes with simple interest and ignores the effect of interest on interest (compound interest).
    Answer
    the face value

    purchase price

    Instead, return on investment should be measured based on cost of investment.

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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    unt basis D = the dollar discount, which is equal to the difference between the face value of the bill, F, and its purchase price, P t = the number of days remaining to maturity 360 = the bank convention of the number of days in a year. <span>Bank discount yield is not a meaningful measure of the return on investment because: It is based on the face value, not on the purchase price. Instead, return on investment should be measured based on cost of investment. It is annualized using a 360-day year, not a 365-day year. It annualizes with simple interest and ignores the effect of interest on interest (compound interest). Holding period yield (HPY) is the return earned by an investor if the money market instrument is held until maturity: P 0 =







    Flashcard 1632864439564

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    Bank discount yield is not a meaningful measure of the return on investment because:
    • It is based on the face value , not on the purchase price.
    • It is [...] .
    • It annualizes with simple interest and ignores the effect of interest on interest (compound interest).
    Answer
    annualized using a 360-day year, not a 365-day year



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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    unt basis D = the dollar discount, which is equal to the difference between the face value of the bill, F, and its purchase price, P t = the number of days remaining to maturity 360 = the bank convention of the number of days in a year. <span>Bank discount yield is not a meaningful measure of the return on investment because: It is based on the face value, not on the purchase price. Instead, return on investment should be measured based on cost of investment. It is annualized using a 360-day year, not a 365-day year. It annualizes with simple interest and ignores the effect of interest on interest (compound interest). Holding period yield (HPY) is the return earned by an investor if the money market instrument is held until maturity: P 0 =







    Flashcard 1632883051788

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    Bank discount yield is not a meaningful measure of the return on investment because:
    • It is based on the face value , not on the purchase price.
    • It is annualized using a 360-day year, not a 365-day year.
    • It [...]
    Answer
    annualizes with simple interest

    ignores the effect of interest on interest (compound interest).

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    unt basis D = the dollar discount, which is equal to the difference between the face value of the bill, F, and its purchase price, P t = the number of days remaining to maturity 360 = the bank convention of the number of days in a year. <span>Bank discount yield is not a meaningful measure of the return on investment because: It is based on the face value, not on the purchase price. Instead, return on investment should be measured based on cost of investment. It is annualized using a 360-day year, not a 365-day year. It annualizes with simple interest and ignores the effect of interest on interest (compound interest). Holding period yield (HPY) is the return earned by an investor if the money market instrument is held until maturity: P 0 =







    Flashcard 1633376668940

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    If we know HPY, then:
    • rMM = [...]
    Answer
    HPY x 360/t

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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    990. Bank discount yield: (1000 - 990)/1000 x 360/60 = 6% Holding period yield: (1000 - 990)/990 = 1.0101% Effective annual yield: (1 + 1.0101%) 365/60 - 1 = 6.3047% Money market yield: (360 x 6%)/(360 - 60 x 6%) = 6.0606% <span>If we know HPY, then: EAY = (1 + HPY) 365/t - 1 r MM = HPY x 360/t If we know EAY, then: HPY = ( 1 + EAY) t/365 - 1 r MM = [(1 + EAY) t/365 - 1] x (360/t) If we know r MM , then: HPY = r MM x (t/360) EAY = (1 + r







    Flashcard 1633419398412

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    If we know rMM, then:
    • EAY = ( [...] )365/t - 1
    Answer
    1 + rMM x t/360

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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    ld: (360 x 6%)/(360 - 60 x 6%) = 6.0606% If we know HPY, then: EAY = (1 + HPY) 365/t - 1 r MM = HPY x 360/t If we know EAY, then: HPY = ( 1 + EAY) t/365 - 1 r MM = [(1 + EAY) t/365 - 1] x (360/t) <span>If we know r MM , then: HPY = r MM x (t/360) EAY = (1 + r MM x t/360) 365/t - 1 <span><body><html>







    Flashcard 1634082884876

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    U.S. bonds typically make [...] payments per year.
    Answer
    two coupon

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    Subject 5. Bond Equivalent Yield
    Periodic bond yields for both straight and zero-coupon bonds are conventionally computed based on semi-annual periods, as U.S. bonds typically make two coupon payments per year. For example, a zero-coupon bond with a maturity of five years will mature in 10 6-month periods. The periodic yield for that bond, r, is indicated by the equation Price = Maturity value







    Flashcard 1634085244172

    Tags
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    Question
    What is the quickest way to convert BEY to YTM?
    Answer
    Convertir interes nominal a efectivo en la calculadora

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    Subject 5. Bond Equivalent Yield
    y. This method ignores the effect of compounding semi-annual YTM, and the YTM calculated in this way is called a bond-equivalent yield (BEY). However, yields of a semi-annual-pay and an annual-pay bond cannot be compared directly <span>without conversion. This conversion can be done in one of the two ways: Convert the bond-equivalent yield of a semi-annual-pay bond to an annual-pay bond.







    Flashcard 1634645445900

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    The effective annual yield is the annualized HPY on the basis of a [...]
    Answer
    365-day year.

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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    #13; Since a pure discount instrument (e.g., a T-bill) makes no interest payment, its HPY is (P 1 - P 0 )/P 0 . Note that HPY is computed on the basis of purchase price, not face value. It is not an annualized yield. <span>The effective annual yield is the annualized HPY on the basis of a 365-day year. It incorporates the effect of compounding interest. Money market yield (also known as CD equivalent yield) is the annualized HPY on the basis of







    Flashcard 1635073789196

    Tags
    #discounted-cashflow-applications
    Question
    The money-weighted rate of return has a serious drawback that involves clients, what is it?
    Answer
    Clients determine when money is given to the investment manager and those decisions may significantly influence the money-weighted rate of return.

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    Parent (intermediate) annotation

    Open it
    The money-weighted rate of return has a serious drawback. Generally, clients determine when money is given to the investment manager and those decisions may significantly influence the money-weighted rate of return .

    Original toplevel document

    Open it
    The money-weighted rate of return has a serious drawback. Generally, clients determine when money is given to the investment manager and those decisions may significantly influence the money-weighted rate of return . A general principle of evaluation, however, is that a person or entity should be judged only on the basis of their own actions, or actions under their control. An evaluation tool should







    Flashcard 1635080604940

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    Question
    central tendency analyzes [...]
    Answer
    where the returns are centered

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    Open it
    where the returns are centered (central tendency); how far returns are dispersed from their center (dispersion); whether the distribution of returns is symmetrically shaped or lopsided (skewness); and &#1







    Flashcard 1635085585676

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    Question
    skewness analyzes whether the distribution of returns is [...]
    Answer
    symmetrically shaped or lopsided

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Open it
    where the returns are centered (central tendency); how far returns are dispersed from their center (dispersion); whether the distribution of returns is symmetrically shaped or lopsided (skewness); and whether extreme outcomes are likely (kurtosis).







    Flashcard 1635088469260

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    #statistical-concepts-and-market-returns
    Question
    The term statistics can have two broad meanings, one referring to [...] and the other to [...]
    Answer
    data

    method.

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    Flashcard 1635091352844

    Tags
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    Question
    A quantity computed from or used to describe a sample of data is called a [...]
    Answer
    Statistic

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    Flashcard 1635094236428

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    Question
    [...] is the study of how data can be summarized effectively to describe the important aspects of large data sets.

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    Flashcard 1635096071436

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    Question
    [...] involves making forecasts, estimates, or judgments about a larger group from the smaller group actually observed.

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Flashcard 1635097906444

    Tags
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    Question
    The foundation for statistical inference is [...]
    Answer
    probability theory

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    Flashcard 1635101576460

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    Question
    Answer
    subset of a population.

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    Flashcard 1635103411468

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    Question
    • Any descriptive measure of a population characteristic is called a [...]

    Answer

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    Flashcard 1635110751500

    Tags
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    Question
    The four types of measurement scales are [...]
    Answer
    nominal, ordinal, interval, and ratio.

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    Flashcard 1635112586508

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    Question
    The acronym for measurement of scale is [...]
    Answer
    NOIR

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    Flashcard 1635118091532

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    Question
    A [...] is a tabular display of data summarized into a relatively small number of intervals.

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Flashcard 1635119926540

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    Question
    When we analyze rates of return, our starting point is [...]
    Answer
    the holding period return

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    Flashcard 1635128315148

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    Question

    An [...] is a set of values within which an observation falls.

    (Frequency distribution)

    Answer

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Flashcard 1635134344460

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    Question

    We represent an interval with the letter [...]

    Answer
    k

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    Flashcard 1635138014476

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    Question

    The [...] cumulates (adds up) the relative frequencies as we move from the first to the last interval.


    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Flashcard 1635139849484

    Tags
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    Question

    A [...] is a bar chart of data that have been grouped into a frequency distribution.

    Answer

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Flashcard 1635149286668

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    Question

    The [...] is the sum of the observations divided by the number of observations.


    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Flashcard 1635152956684

    Tags
    #statistical-concepts-and-market-returns
    Question

    The population mean is represented by the greek letter [...],

    Answer
    μ

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    Flashcard 1635156626700

    Tags
    #statistical-concepts-and-market-returns
    Question

    The sample mean or average is represented with the letter

    Answer
    \(\bar {X} \) (read “X-bar”

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    Flashcard 1635158461708

    Tags
    #statistical-concepts-and-market-returns
    Question

    Observations over individual units at a point in time, as opposed to time-series data.

    Answer
    Cross sectional data

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    Flashcard 1636296166668

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    Is Bank discount yield a meaningful measure of the return on investment?
    Answer
    not

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    unt basis D = the dollar discount, which is equal to the difference between the face value of the bill, F, and its purchase price, P t = the number of days remaining to maturity 360 = the bank convention of the number of days in a year. <span>Bank discount yield is not a meaningful measure of the return on investment because: It is based on the face value, not on the purchase price. Instead, return on investment should be measured based on cost of investment. It is annualized using a 360-day year, not a 365-day year. It annualizes with simple interest and ignores the effect of interest on interest (compound interest). Holding period yield (HPY) is the return earned by an investor if the money market instrument is held until maturity: P 0 =







    Flashcard 1636857941260

    Tags
    #reading-9-probability-concepts
    Question
    [...] is a procedure for updating beliefs based on new information.
    Answer
    Bayes’ formula

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    Flashcard 1636859776268

    Tags
    #reading-9-probability-concepts
    Question
    In probability, the return on a risky asset is an example of a [...]

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Flashcard 1636866067724

    Tags
    #reading-9-probability-concepts
    Question
    An [...] is a specified set of outcomes.
    Answer

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    Flashcard 1636869999884

    Tags
    #reading-9-probability-concepts
    Question
    A [...] is a number between 0 and 1 describing the chance that a stated event will occur.
    Answer
    Probability

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    Flashcard 1636879174924

    Tags
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    Question

    If A, B, and C are mutually exclusive and exhaustive events then P(A) + P(B) + P(C) = [...]

    Answer
    1.

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    Flashcard 1636948905228

    Tags
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    Question

    The probability of any event is the [...] included in the definition of the event.

    Answer
    sum of the probabilities of the distinct outcomes

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    Flashcard 1637148134668

    Tags
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    Question

    Can we ecalculate an empirical probability of an event not in the historical record?

    Answer
    No

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    Flashcard 1637161766156

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    Question

    Because a priori and empirical probabilities generally do not vary from person to person, they are often grouped as [...]


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    Flashcard 1637196893452

    Tags
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    Question
    A result in probability theory stating that inconsistent probabilities create profit opportunities.
    Answer
    Dutch book theorem

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    Flashcard 1637206592780

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    Question
    An unconditional probability is also called [...]
    Answer
    a Marginal Probability

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    Flashcard 1637210524940

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    Question
    A fraction is made up of two integers—one on the top, and one on the bottom. The top one is called the [...] , the bottom one is called the [...]
    Answer
    numerator

    denominator

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    Flashcard 1637214457100

    Tags
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    Question
    In the question “What is the probability of A, given that B has occurred?” The probability in answer to this last question is a [...]

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    Flashcard 1637258759436

    Tags
    #reading-9-probability-concepts
    Question
    [...] (read: “the probability of A given B”).
    Answer
    P(A | B)

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    Flashcard 1637266099468

    Tags
    #reading-9-probability-concepts
    Question
    [...] (read: “the probability of A and B”).
    Answer
    P(AB)

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    Flashcard 1637269769484

    Tags
    #reading-9-probability-concepts
    Question

    The conditional probability of A given that B has occurred is equal to the [...] divided by [...] (assumed not to equal 0).

    Answer
    joint probability of A and B divided by the probability of B

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    Flashcard 1637564157196

    Tags
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    Question
    Wagering meaning
    Answer
    Apostar

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    Odds
    y’s EPS for FY2014 beating $0.69 are 1 to 7 means that the speaker believes the probability of the event is 1/(1 + 7) = 1/8 = 0.125. Odds against E = [1 − P(E)]/P(E), the reciprocal of odds for E. <span>Given odds against E of “a to b,” the implied probability of E is b/(a + b). The statement that the odds against the company’s EPS for FY2014 beating $0.69 are 15 to 1 is consistent with a belief that the probability of the event is







    Flashcard 1637588798732

    Tags
    #reading-7-discounted-cashflows-applications
    Question
    Is the Money market yield annualized as compounded interest or simple interest?
    Answer
    Simple

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    Subject 4. Different Yield Measures of a U.S. Treasury Bill
    se price, not face value. It is not an annualized yield. The effective annual yield is the annualized HPY on the basis of a 365-day year. It incorporates the effect of compounding interest. <span>Money market yield (also known as CD equivalent yield) is the annualized HPY on the basis of a 360-day year using simple interest. Example An investor buys a $1,000 face-value T-bill due in 60 days at a price of $990. Bank discount yield: (1000 - 990







    Flashcard 1637678451980

    Tags
    #reading-9-probability-concepts
    Question
    The odds of success are the ratio of [...]
    Answer
    success to failure S:F

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    Flashcard 1640988544268

    Tags
    #discounted-cashflow-applications
    Question
    Can I calculate the dollar weighted return if t=0 is unknown?
    Answer
    No, you need to know every cashflow

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    Flashcard 1641040448780

    Tags
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    Question

    The letter k represents [...]

    Answer
    an interval

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    scheduled repetition interval               last repetition or drill






    Flashcard 1644831837452

    Tags
    #reading-9-probability-concepts
    Question
    A quantity whose future outcomes are uncertain.
    Answer
    Random variable

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    Flashcard 1644833672460

    Tags
    #reading-9-probability-concepts
    Question
    A possible value of a random variable.
    Answer
    Outcome

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    Flashcard 1644835769612

    Tags
    #reading-9-probability-concepts
    Question
    Any outcome or specified set of outcomes of a random variable.
    Answer
    Event

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    Flashcard 1644840488204

    Tags
    #reading-9-probability-concepts
    Question
    We use [...] to highlight statements that define events.
    Answer
    italics

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    Flashcard 1644842585356

    Tags
    #reading-9-probability-concepts
    Question
    A number between 0 and 1 describing the chance that a stated event will occur.
    Answer
    Probability

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    Flashcard 1644844682508

    Tags
    #reading-9-probability-concepts
    Question
    Covering or containing all possible outcomes.
    Answer
    Exhaustive

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    Flashcard 1644847041804

    Tags
    #reading-9-probability-concepts
    Question
    The probability of an event estimated as a relative frequency of occurrence.
    Answer
    Empirical probability

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    Flashcard 1644849401100

    Tags
    #reading-9-probability-concepts
    Question
    A probability drawing on personal or subjective judgment.
    Answer
    Subjective probability

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    Flashcard 1644851236108

    Tags
    #reading-9-probability-concepts
    Question
    A probability based on logical analysis rather than on observation or personal judgment.
    Answer
    A priori probability

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    Flashcard 1644853071116

    Tags
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    Question
    Probabilities that generally do not vary from person to person; includes a priori and empirical probabilities.
    Answer
    Objective probability

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    Flashcard 1644864605452

    Tags
    #reading-9-probability-concepts
    Question
    A result in probability theory stating that inconsistent probabilities create profit opportunities.
    Answer
    Dutch book theorem

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    Flashcard 1644869061900

    Tags
    #reading-9-probability-concepts
    Question
    The probability of an event not conditioned on another event.
    Answer
    Unconditional probability

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    Flashcard 1644872731916

    Tags
    #reading-9-probability-concepts
    Question
    The probability of an event given (conditioned on) another event.
    Answer
    Conditional probability

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    Flashcard 1644876664076

    Tags
    #reading-9-probability-concepts
    Question
    The probability of the joint occurrence of stated events.
    Answer
    Joint probability

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    Flashcard 1644878761228

    Tags
    #reading-9-probability-concepts
    Question
    The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.
    Answer
    Multiplication rule for probabilities

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    Flashcard 1644886363404

    Tags
    #reading-9-probability-concepts
    Question
    it is common to use a [...] to represent a defined event.
    Answer
    capital letter in italics

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    Flashcard 1644888198412

    Tags
    #reading-9-probability-concepts
    Question
    The sum of the probabilities of any set of mutually exclusive and exhaustive events equals [...] .
    Answer
    1

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    Flashcard 1644892130572

    Tags
    #reading-9-probability-concepts
    Question
    The probability of any event is the sum of the probabilities of [...]
    Answer
    the distinct outcomes included in the definition of the event.

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    Flashcard 1644904975628

    Tags
    #reading-9-probability-concepts
    Question
    Given odds for E of “a to b,” the implied probability of E is [...]
    Answer
    a/(a + b).

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    Flashcard 1644908907788

    Tags
    #reading-9-probability-concepts
    Question
    Odds against are the [...] of odds for E
    Answer
    reciprocal

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    Flashcard 1644920442124

    Tags
    #reading-9-probability-concepts
    Question
    “What is the probability of this event A?” is an [...]

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    Flashcard 1644922277132

    Tags
    #reading-9-probability-concepts
    Question
    Unconditional probability is also frequently referred to as [...]
    Answer
    marginal probability.​​​​​​​

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    Flashcard 1644924898572

    Tags
    #reading-9-probability-concepts
    Question
    The denominator in an unconditional probability is [...]
    Answer
    1

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    Flashcard 1644926733580

    Tags
    #reading-9-probability-concepts
    Question
    The denominator in an conditional probability is [...] of the event that conditions it.
    Answer
    the sum of the probabilities for all outcomes

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    Flashcard 1644928830732

    Tags
    #reading-9-probability-concepts
    Question
    “What is the probability of A, given that B has occurred?” The probability in answer to this last question is a [...]

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    Flashcard 1644932500748

    Tags
    #reading-9-probability-concepts
    Question
    To state an exact definition of conditional probability, we first need to introduce the concept of [...]
    Answer
    joint probability.

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    Flashcard 1644934860044

    Tags
    #reading-9-probability-concepts
    Question
    “What is the probability of both A and B happening?” The answer to this question is a [...]
    Answer
    joint probability.

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    Flashcard 1644936695052

    Tags
    #reading-9-probability-concepts
    Question
    [...] (read: “the probability of A and B”)
    Answer
    P(AB)

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    Flashcard 1644938530060

    Tags
    #reading-9-probability-concepts
    Question
    The joint probability of A and B is the [...]
    Answer
    sum of the probabilities of the outcomes they have in common.

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    Flashcard 1645005114636

    Tags
    #analysts-questions
    Question
    To find quantiles in a frequency distribution you have to know [...]
    Answer
    cumulative frequency

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    Flashcard 1645231082764

    Tags
    #reading-9-probability-concepts
    Question
    the [...] of an experiment or random trial is the set of all possible outcomes or results of that experiment.
    Answer
    sample space

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    https://www.google.com.mx/search?q=sample%2Bspace%2Bprobability&amp;rlz=1C5CHFA_enMX588MX588&amp;oq=sample%2Bspace%2Bproba&amp;aqs=chrome.0.0j69i57j0l4.4172j0j1&amp;sourceid=chrome&amp;ie=UTF-8
    t":"Math Goodies","th":98,"tu":"https://encrypted-tbn0.gstatic.com/images?q\u003dtbn:ANd9GcQcW8yGVex34TZK0u33zmGPrJUYi4Sw9vz1DI4e1YYbbQn3bEVPNVAGcXN2","tw":216} In probability theory, <span>the sample space of an experiment or random trial is the set of all possible outcomes or results of that experiment. A sample space is usually denoted using set notation, and the possible ordered outcomes are listed as elements in the set. Sample space - Wikipedia https://en.wikipedia.org/wiki/Sam







    Flashcard 1645290851596

    Tags
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    Question
    The complement of event A is [...]
    Answer
    the event that A does not occur.

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    Subject 2. Unconditional, Conditional, and Joint Probabilities
    The complement of event A is the event that A does not occur. It is expressed as A c . The probabilities of an event and its complement must have a sum of 1: P(A) + P(A c ) = 1. Note that event A and its complement, A c , are mutually exclusive (t







    Flashcard 1645293210892

    Tags
    #reading-9-probability-concepts
    Question
    The [...] is expressed as Ac
    Answer
    complement of event A

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    Subject 2. Unconditional, Conditional, and Joint Probabilities
    The complement of event A is the event that A does not occur. It is expressed as A c . The probabilities of an event and its complement must have a sum of 1: P(A) + P(A c ) = 1. Note that event A and its complement, A c , are mutually exclusive (there is no overlapping







    Flashcard 1645890637068

    Tags
    #reading-9-probability-concepts
    Question
    If events A and B are mutually exclusive, the joint probability of A and B is [...]
    Answer
    0.

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    Subject 3. Addition Rule for Probabilities: the Probability that at Least One of Two Events Will Occur
    P(A or B) = P(A) + P(B) - P(AB) The logic behind this formula is that when P(A) and P(B) are added, the occasions on which A and B both occur are counted twice. To adjust for this, P(AB) is subtracted. <span>If events A and B are mutually exclusive, the joint probability of A and B is 0. Consequently, the probability that either A or B occurs is simply the sum of the unconditional probabilities of A and B: P (A or B) = P(A) + P(B). What is the probability t







    Flashcard 1645902433548

    Tags
    #reading-9-probability-concepts
    Question
    Two events, A and B, are independent if and only if [...]
    Answer
    P(A|B) = P(A),

    or equivalently, P(B|A) = P(B).

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    Subject 4. Multiplication Rule for Independent Events
    Two events, A and B, are independent if and only if P(A|B) = P(A), or equivalently, P(B|A) = P(B). That is, the occurrence of one event has no influence on the probability of the occurrence of the other event. In more detail, whether or not B occurs will have no effect on







    Flashcard 1645915016460

    Tags
    #reading-9-probability-concepts
    Question
    multiplication rule for independent events.
    Answer
    P(A and B) = P(A) x P(B)

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    Subject 4. Multiplication Rule for Independent Events
    nd B both occur is: P(A and B) = P(A) x P(B) In other words, the probability of A and B both occurring is the product of the probability of A and the probability of B. This relationship is known as the <span>multiplication rule for independent events. What is the probability that a fair coin will come up with heads twice in a row? Two events must occur: heads on the first toss and heads on the second toss. Since the prob







    Flashcard 1645917375756

    Tags
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    Question

    For any number of independent events E1, E2.....En, the probability that all of them occur is:

    P(E1 and E2..... and En) = [...]
    Answer
    P(E1) x P(E2) x ..... x P(En)

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    Subject 4. Multiplication Rule for Independent Events
    in the deck, the probability of the first event is 1/52. Since 13/52 = 1/4 of the deck is composed of clubs, the probability of the second event is 1/4. Therefore, the probability of both events is: 1/52 x 1/4 = 1/208. Similarly, <span>for any number of independent events E 1 , E 2 .....E n , the probability that all of them occur is: P(E 1 and E 2 ..... and E n ) = P(E 1 ) x P(E 2 ) x ..... x P(E n ) Example In a bullish market, three shares, chosen from different sectors of the market, have probabilities of 0.6, 0.5 and 0.8 that their share prices will ris







    Flashcard 1645930220812

    Tags
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    Question
    The [...] explains the unconditional probability of an event in terms of probabilities conditional on the scenarios.
    Answer
    total probability rule

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    Subject 5. The Total Probability Rule
    If we have an event or scenario S, the event not-S, called the complement of S, is written S C . Note that P(S) + P(S C ) = 1, as either S or not-S must occur. The total probability rule explains the unconditional probability of an event in terms of probabilities conditional on the scenarios. P(A) = P(A|S)P(S) + P(A|S C )P(S C ) P(A) = P(A|S 1 )P(S 1 ) + P(A|S 2 )P(S 2 ) + ... + P(A|S n )P(S n ) The first equation is just a special case of the secon







    Flashcard 1646448479500

    Tags
    #reading-9-probability-concepts
    Question
    Given 3 probabilities to weight an expected value, which one of the outcomes wil happen?
    Answer
    none of the outcomes actually produces the amount expected

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    Subject 6. Expected Value, Variance, and Standard Deviation of a Random Variable
    40,000 + 24,000 + 0 = $64,000 Thus, the organizers can expect to take in $64,000. Since it costs $50,000 to stage the event, this translates to a profit of $14,000, so they should certainly go ahead with the venture. <span>It's important to realize that none of the outcomes actually produces an amount of $64,000. This is simply the weighted average of all possible outcomes. Although there is a 50% chance of a loss the big profit that will be made the remaining 50% of the time more than offsets t







    Flashcard 1646652427532

    Tags
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    Question
    P (A or B) means the probability of [...] or [...]
    Answer
    either one event can occur

    both events can occur.

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    Parent (intermediate) annotation

    Open it
    If we have two events, A and B, that we are interested in, we often want to know the probability that either A or B occurs. Note the use of the word "or," the key to this rule. The "or" is what we call an "inclusive or." In other words, either one event can occur or both events can occur.

    Original toplevel document

    Subject 3. Addition Rule for Probabilities: the Probability that at Least One of Two Events Will Occur
    If we have two events, A and B, that we are interested in, we often want to know the probability that either A or B occurs. Note the use of the word "or," the key to this rule. The "or" is what we call an "inclusive or." In other words, either one event can occur or both events can occur. Such probabilities are calculated using the addition rule for probabilities. P(A or B) = P(A) + P(B) - P(AB) The logic behind this f







    Flashcard 1646894386444

    Tags
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    Question
    Covariance of returns is 0 if [...]
    Answer
    returns on the assets are unrelated.

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    Subject 7. Covariance and Correlation
    Facts about covariance: Covariance of returns is negative if, when the return on one asset is above its expected value, the return on the other asset is below its expected value (an average inverse relationship between returns). <span>Covariance of returns is 0 if returns on the assets are unrelated. Covariance of returns is positive if, when the return on one asset is above its expected value, the return on the other asset is above its expected value (an average positive relationsh







    Flashcard 1646896745740

    Tags
    #reading-9-probability-concepts
    Question
    Covariance of returns is [...] if, when the return on one asset is above its expected value, the return on the other asset is above its expected value.
    Answer
    positive

    (an average positive relationship between returns).

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    Subject 7. Covariance and Correlation
    tive if, when the return on one asset is above its expected value, the return on the other asset is below its expected value (an average inverse relationship between returns). Covariance of returns is 0 if returns on the assets are unrelated. <span>Covariance of returns is positive if, when the return on one asset is above its expected value, the return on the other asset is above its expected value (an average positive relationship between returns). The covariance of a random variable with itself (own covariance) is its own variance. Example Suppose that the future short-term outlook for the economy is favorable w







    Flashcard 1646899105036

    Tags
    #reading-9-probability-concepts
    Question
    The covariance of a random variable with itself (own covariance) is [...]
    Answer
    its own variance.

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    Subject 7. Covariance and Correlation
    returns on the assets are unrelated. Covariance of returns is positive if, when the return on one asset is above its expected value, the return on the other asset is above its expected value (an average positive relationship between returns). <span>The covariance of a random variable with itself (own covariance) is its own variance. Example Suppose that the future short-term outlook for the economy is favorable with a probability 0.6 and unfavorable with a probability of 0.4. For two stocks, F and







    Flashcard 1646905396492

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    #reading-9-probability-concepts
    Question
    Correlation is a number between [...]
    Answer
    -1 and +1.

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    Subject 7. Covariance and Correlation
    where. The correlation between two random variables, R i and R j , is defined as: Alternative notations are corr(R i , R j ) and ρ ij . Properties of correlation: <span>Correlation is a number between -1 and +1. A correlation of 0 indicates an absence of any linear (straight-line) relationship between the variables. Increasingly positive correlation indicates an increasingly strong positive lin







    Flashcard 1646907755788

    Tags
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    Question
    A correlation of [...] indicates an absence of any linear (straight-line) relationship between the variables.
    Answer
    0

    statusnot learnedmeasured difficulty37% [default]last interval [days]               
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    Subject 7. Covariance and Correlation
    two random variables, R i and R j , is defined as: Alternative notations are corr(R i , R j ) and ρ ij . Properties of correlation: Correlation is a number between -1 and +1. <span>A correlation of 0 indicates an absence of any linear (straight-line) relationship between the variables. Increasingly positive correlation indicates an increasingly strong positive linear relationship (up to 1, which indicates a perfect linear relationship). Increasingly negative correlati







    Flashcard 1646910115084

    Tags
    #reading-9-probability-concepts
    Question
    Increasingly positive correlation indicates an [...]
    Answer
    increasingly strong positive linear relationship

    (up to 1, which indicates a perfect linear relationship)

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    Subject 7. Covariance and Correlation
    otations are corr(R i , R j ) and ρ ij . Properties of correlation: Correlation is a number between -1 and +1. A correlation of 0 indicates an absence of any linear (straight-line) relationship between the variables. <span>Increasingly positive correlation indicates an increasingly strong positive linear relationship (up to 1, which indicates a perfect linear relationship). Increasingly negative correlation indicates an increasingly strong negative linear relationship (down to -1, which indicates a perfect inverse linear relationship). The correlati







    Flashcard 1646945766668

    Tags
    #reading-9-probability-concepts
    Question
    If A and B are mutually exclusive P(A or B) = [...]
    Answer
    P(A) + P(B).

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    Flashcard 1647708343564

    Tags
    #reading-9-probability-concepts
    Question
    A rule explaining the unconditional probability of an event in terms of probabilities of the event conditional on mutually exclusive and exhaustive scenarios.
    Answer
    Total probability rule

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    Flashcard 1647713848588

    Tags
    #reading-9-probability-concepts
    Question

    P(A) = P(AS)+P(ASC) = P(A|S)P(S) + P(A|SC)P(SC)
    Answer
    Total probability rule

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    Flashcard 1647723810060

    Tags
    #reading-9-probability-concepts
    Question
    The scenarios for the total probability rule must be [...]
    Answer
    mutually exclusive and exhaustive

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    Flashcard 1647743470860

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    Question
    The probability-weighted average of the possible outcomes of a random variable.
    Answer
    Expected value

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    Flashcard 1647772044556

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    Question
    The two notations for variance are [...]
    Answer
    σ2(X) and Var(X).

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    Flashcard 1647782792460

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    Question
    The order of calculation is always [...] , then [...] , then standard deviation.
    Answer
    expected value

    variance

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    Flashcard 1647821851916

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    Question
    Total probability rule for expected value:

    E(X)= [...]
    Answer
    E(X)=E(X|S)P(S)+E(X|SC)P(SC)

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    Flashcard 1647829191948

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    Question
    so small or unimportant as to be not worth considering; insignificant.
    Answer
    Negligible

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    Flashcard 1647852522764

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    Question
    A diagram with branches emanating from nodes representing either mutually exclusive chance events or mutually exclusive decisions.
    Answer
    Tree diagram

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    Flashcard 1648670936332

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    Question
    Covariances are often presented in a square format called a [...]

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    Flashcard 1648900574476

    Tags
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    Question
    Probabilities reflecting beliefs prior to the arrival of new information.
    Answer
    Prior probabilities

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    Flashcard 1648906341644

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    Question
    The probability of an observation, given a particular set of conditions.
    Answer
    Likelihood

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    Flashcard 1648995994892

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    Question
    [...] =n(n−1)(n−2)(n−3)…1
    Answer
    n!

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    Flashcard 1652129402124

    Tags
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    Question
    A listing in which the order DOES matter is known as a [...]
    Answer
    permutation

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    Subject 10. Principles of Counting
    (The combination formula, or the binomial formula): For example, if you select two of the ten stocks you are analyzing, how many ways can you select the stocks? 10! / [(10 - 2)! x 2!] = 45. <span>An ordered listing is known as a permutation, and the formula that counts the number of permutations is known as the permutation formula. The number of ways that we can choose r objects from a total of n objects, where the order i







    Flashcard 1652316048652

    Tags
    #reading-9-probability-concepts
    Question
    Regarding counting, there can never be more [...] than [...] for the same problem.
    Answer
    combinations

    permutations

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    Parent (intermediate) annotation

    Open it
    Regarding counting, there can never be more combinations than permutations for the same problem, because permutations take into account all possible orderings of items, whereas combinations do not.

    Original toplevel document

    Subject 10. Principles of Counting
    he ten stocks you are analyzing and invest $10,000 in one stock and $20,000 in another stock, how many ways can you select the stocks? Note that the order of your selection is important in this case. 10 P 2 = 10!/(10 - 2)! = 90 <span>Note that there can never be more combinations than permutations for the same problem, because permutations take into account all possible orderings of items, whereas combinations do not. <span><body><html>







    Flashcard 1652332039436

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    Question

    the [...] between two random variables is the probability-weighted average of the cross-products of each random variable’s deviation from its own expected value.

    Answer
    covariance

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    Open it
    the covariance between two random variables is the probability-weighted average of the cross-products of each random variable’s deviation from its own expected value.







    Flashcard 1652360350988

    Tags
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    Question
    The word marginal in economics roughly means [...]
    Answer
    incremental

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    Open it
    l>In analyses of probabilities presented in tables, unconditional probabilities usually appear at the ends or margins of the table, hence the term marginal probability. Because of possible confusion with the way marginal is used in economics (roughly meaning incremental), we use the term unconditional probability throughout this discussion.<html>







    Flashcard 1652366642444

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    Question
    If we know both the set of all the distinct possible outcomes of a random variable and the assignment of probabilities to those outcomes then we have the [...] of the random variable.
    Answer
    the probability distribution

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    If we know both the set of all the distinct possible outcomes of a random variable and the assignment of probabilities to those outcomes—the probability distribution of the random variable—we have a complete description of the random variable, and we can assign a probability to any event that we might describe







    Flashcard 1652376866060

    Tags
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    Question
    The multinomial formula with two different labels (k = 2) is called the [...]
    Answer
    combination formula or binominal formula

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    Multinominal formula
    A mutual fund guide ranked 18 bond mutual funds by total returns for the year 2014. The guide also assigned each fund one of five risk labels: high risk (four funds), above-average risk (four funds), average risk (t







    Flashcard 3663972142348

    Question
    [default - edit me]
    Answer
    When you connect two or more computers in a network, each computer becomes more useful. There’s a rule that describes this, called Metcalfe’s Law. Robert Metcalfe was the original designer of the Ethernet structure used in most modern computer networks; his law states that the value (or power) of a network increases in proportion to the square of the number of devices connected to that network. The math is pretty subjective, but Metcalfe’s Law says that two computers connected together are about 4 times as useful as a single computer; if you connect 10 computers, the network is 100 times more powerful, and so forth.

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    Two or more objects, or nodes, that use the network to connect them
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    A set of communication channels that carry something—speech, TV shows, computer data—between or among nodes
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    A set of rules that controls network traffic—on a highway, the rules might specify that vehicles drive on the right and pass on the left, and every car and truck must display a license plate to identify it; in a tele- phone network, the rules define the form and use of unique numbers (called “telephone numbers”) to identify each node and establish con- nections between them. To assure that a network operates properly, every node and every channel must follow the rules for that particular network.
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    In a data network, the speed of a network is usually shown in millions of bits (or megabits) per second (Mbps)
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    Never underestimate the bandwidth of a station wagon full of floppy disks.
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    Depending on the data transfer speed and the network’s specific requirements, the computer might use a parallel port, a serial port, an Ethernet port, a USB or FireWire port, or a Wi-Fi antenna.
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    Because these connectors and antennas move data in both directions, they are input/output ports or I/O ports, but that term is more often used to describe the computer’s serial and parallel data connectors
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    A well-designed file-sharing system allows each user to set every file or folder as either “public” or “private.”
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    your Internet service terminates in just one place, most often in a piece of electronic equipment called a modem (that’s geek-speak for modulator/demodulator, a device that converts between computer data and some other type of communications signal)
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    When you spend that extra money for a DSL or cable Internet link (or fiber optic link), you want easy access to the Internet from every computer in the house. When you connect your network to the modem through a gateway router (shown in Figure 1-2), you can reach the Internet through any computer on that network.
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    Within a home or small office network, you can use instant messaging, with or without sound and pictures, to communicate from one room to another. It might be a simple message, such as “Dinner’s ready,” or a more complicated request for information from someone else in the building. And of course, if there are young people in the house, the instant message program will quickly become a channel for gossip and idle conversation.
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    A network printer can either connect directly to the network as a separate node (a printer server) or through one of the network’s computers.
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    A stand-alone video camera (often with a built-in microphone) connected to your home network can have several uses. You can place a camera at the front door to identify visitors, or use one in a nursery or playroom to keep an eye on your children from computers in other parts of the house. Other devices can use special sensors to detect smoke and fires, unlocked or open doors and windows, broken glass, or flooding and other problems and send alerts to the homeowner on a local computer or to a home protection service through the Internet. Combined with a wireless network link, the same kind of security moni- toring can extend to a detached garage, shed, or other separate buildings, even if the house’s wired network does not reach those locations. Chapter 15 explains how to connect and use cameras and other security devices to your network.
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    Home automation systems usually use separate wiring from a household data network, but sometimes they’re closely integrated. Home automation can be as simple as turning on outside lights after the sun goes down, or as com- plex as opening and closing drapes, monitoring and adjusting heating and air conditioning, operating a lawn sprinkler, or filling the dog’s water dish. You can also expect the next generation of “smart” kitchen and laundry appliances to include network connections that will allow them to let you know when the roast is cooked or the clothes dryer has completed its fluff cycle.
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    Individual bits only offer two options, so they’re not particularly useful, but when you string eight of them together (into a byte), you can have 256 different combinations (2 × 2 × 2 × 2 × 2 × 2 × 2 × 2). That’s enough to assign a different sequence to every letter of the alphabet (both upper- and lowercase), the ten digits from 0 to 9, spaces between words, and other symbols such as punctuation marks and many letters used in foreign alphabets
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    The most widely used coding system for converting bytes to characters is called ASCII (American Standard Code for Information Interchange).
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    For example, it can divide every second of sound from a microphone or an analog recording into thousands of very short segments and use 16 or 24 bits to specify the content of each segment, or divide a picture into millions of individual points (called pixels, short for picture elements) and use a series of bits to specify the color of each bit
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    And when you’re using existing circuits such as telephone lines, you don’t have any choice; you must find a way to send one bit at a time, with some additional bits and pauses that identify the beginning of each new byte. This is a serial data communications channel, because you’re sending the bits one after another.
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    you must have a way to convert the text or other output of the computer to the signals used by the transmission medium, and to convert the same signals back again at the other end
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    Communication over a direct physical connection (such as a wire) between a single origin and destination doesn’t need any kind of address or routing information to tell a message where to go.
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    This kind of connection is great for voice and for simple data links, but it’s not particularly efficient for digital data on a complex net- work that serves many origins and destinations, because a single connection ties up the circuit all the time, even when no data is moving through the channel. The alternative is to send your message to a switching center that will hold it until a link to the destination becomes available. This is known as a store and forward system.
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    To make the network even more efficient, you can divide messages that are longer than some arbitrary limit into separate pieces, called packets or frames. Packets from more than one message can alternate with packets containing other messages as they travel between switching centers, and reassemble themselves into the original messages at the destination.
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    The packets from a single message might alternate with packets from one or more other messages as they move through parts of the network. For example, if you send a message to a recip- ient in another city, the packets usually move through an inter-city channel along with many other messages.
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    Each data packet must also contain yet another set of information: the address of the packet’s destination, the sequence order of this packet relative to other packets in the original transmission, and so forth.
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    The headers (at the beginning of a packet) and trailers (at the end of a packet) attached to each packet include the address of the packet’s desti- nation, information that allows the recipient to confirm that the packet’s content is accurate, and information that the recipient uses to reassemble the packets in the original order. Between the origin and the destination, network routing equipment sometimes adds more headers or trailers that contain routing instructions and other administrative information
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    network adds and removes headers and trailers at different stages of a communication session.
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    Each layer may attach additional information to the original message and strip off that information after it has done whatever the added information instructed it to do
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    contain the content of the message, followed by an error-checking sequence, is called a frame.
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    Both wired and wireless networks divide the data stream into frames that contain various forms of handshaking information along with the original data.
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    The network deals with packets and frames at different places during the process of transmitting data. Fortunately, this all happens automatically, so you (as a network user) don’t have to worry about adding or removing them by hand.
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    Therefore, your data stream must include a process called error checking. Error checking is accomplished by adding some kind of standard information to each byte. In a simple computer data network, the handshaking informa- tion is called the parity bit, which tells the device receiving each byte whether the sum of the ones and zeroes inside the byte is odd or even. This value is called a checksum. If the receiving device discovers that the parity bit is not correct, it instructs the transmitter to send the same byte again.
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    More complex networks, including wireless systems, include additional error-checking hand- shaking data with each string of data.
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    First it has to warn the device at the other end that it is ready to send and make sure the intended recipient is ready to accept data. To accomplish this, a series of “handshaking” requests and answers must surround the actual data.
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    it’s important to understand that not every bit that moves through a computer data network is part of the original block of information that arrived at the input computer. In a complex net- work such as a wireless data channel, as much as 40 percent or more of the transmitted data is handshaking and other overhead. It’s all essential, but every one of those bits increases the amount of time that the message needs to move through the network.
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    Ethernet was introduced in the 1970s as a method for connecting multiple computers and related equipment in the same building. Ethernet offers several advantages: It’s fast, it’s extremely flexible, it’s relatively easy to install and use, and it’s inexpensive. It has become an industry standard supported by dozens of manufacturers, so you can use different brands of equipment in the same network. Today, more than 85 percent of all local area networks (LANs), including just about every modern home and office network, use some form of Ethernet to provide the physical connection between computers through twisted-pair cables, coaxial cables, or fiber optic cables
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    One of Ethernet’s most important features is the method it uses to prevent conflicts among nodes, called Carrier Sense Multiple Access with Collision Detection (CSMA/CD). Every time a network node is ready to transmit a frame, it checks if another frame is already using the network; if the network is clear, the node sends the frame. But if the node detects that another frame is using the net- work (a condition called a collision), it waits a random period of time before it tries again. CSMA/CD is important because it allows a relatively large number of computers and other devices to operate through the same network without interference.
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    There are many Ethernet specifications that cover different data transfer speeds and different kinds of cables and connectors. The ones you’re most likely to see in a small LAN include the following: 10Base-T: 10 Mbps through twisted-pair cables 100Base-T or Fast Ethernet: 100 Mbps through twisted-pair cables 1000Base-T or Gigabit Ethernet: 1000 Mbps through twisted-pair or fiber optic cables Wireless or Wi-Fi: any of several systems that use radio signals instead of wires—the latest 802.11n Wi-Fi networks can operate at speeds up to 70 Mbps
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    A 10Base-T network is adequate for a small home network. It’s faster than most broadband Internet services, so it’s sufficient for handling the inbound and outbound data (including audio and video) that you exchange with the Internet. However, most new network ports, hubs, and switches can handle both 10Base-T and 100Base-T, so there’s very little point to limiting the network to the slower speed. 100Base-T will also allow you to move pictures, music, and videos and play multiplayer games within your own network much faster than a 10Base-T network, and it will not limit the speed of an 802.11n link. Considering the insignificant difference in cost, today’s 100Base-T networks are always a better choice than the older 10Base-T versions.
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    If a 100Base-T network can’t handle 100 Mbps because of interference or some other problem, it will automatically drop down to 10Base-T.
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    A 10Base-T device can work on a 100Base-T network, but it will force the whole network to drop down to 10 Mbps.
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    You might also see the word Ethernet used to identify the connector on a computer, printer, or other network device that mates with an Ethernet cable to connect the device to a network. The instruction manual or the label on every piece of Ethernet-compatible equipment should tell you which type of connection it uses.
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    Twisted-pair cables are bundles of wires in which each pair of wires is twisted together, as shown in Figure 2-3. Because data normally moves in only one direction through each pair of wires, a 10Base-T or 100Base-T network connection uses two pairs—one for each direction. The most common Ethernet cables include a total of eight wires in four color-coded wire pairs, so you can use the remaining wires as spares.
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    Another name for Wi-Fi is wireless Ethernet, because Wi-Fi uses many of the same data-handling rules and specifications as a wired Ethernet network. However, every Wi-Fi packet must include additional handshaking data, so the overall data transfer speed is often slower than a conventional Ethernet link.
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    In a powerline network, computer data moves through a building’s existing electric wiring. Each computer connects through a parallel port, a USB port, or an Ethernet port to a data adapter that plugs directly into an AC wall outlet. The same power transformer that feeds your house wiring also isolates your data network from your neighbors
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    The most widely used standard for powerline networks is called HomePlug. The greatest advantage of HomePlug and other powerline networks is that the wires are already in place. Every AC wall socket in the house can double as a network connection point. It’s also more secure than Wi-Fi, and it can reach greater distances than a Wi-Fi network with just one base station. Wi-Fi signals are often blocked by thick walls and other obstacles that make no difference to a powerline system.
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    You must plug all your powerline adapters directly into wall outlets. Surge protectors and powerline conditioners often absorb powerline network data, because they see the data as “noise” on the AC power voltage. Conversely, if you’re using a powerline net- work, you will want to connect your stereo or home theater system to power conditioners to filter out the noise produced by the network.
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    Two more home networking methods are possible, but they’re almost always provided as supplements to other services. These systems use the internal telephone wiring that connects extension telephones in several rooms or the coaxial cable (coax) that provides cable TV signals.
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    There’s one more concept that every network planner should understand: the difference between data terminal equipment (DTE) and data communications equipment or data circuit-terminating equipment (DCE)
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    Data can move through a wire in only one direction. When a data link sends and receives signals at the same time, it must use separate wires to send data from the DTE to the DCE, and from the DCE to the DTE. Therefore, a network device uses separate inputs and outputs on the same multipin connector. The specific pin assignment is different in different connection types, but the inputs and outputs are always different pins or sockets.
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    Therefore, when you connect two pieces of equipment, the outputs at each end must go to inputs at the other end. If Pin 2 on one device is an output, Pin 2 on the other device must be an input. Most standard data cables connect each connector pin to the same numbered pin at the other end, so connecting two devices through a cable is exactly the same as plugging one device directly into another.
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    When you connect a terminal to a control device, the output pins on the DTE device connect to the input pins on the DCE device.
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    Direct computer-to-computer communication requires a special cable because you can’t connect a DTE device directly to another DTE device. When you connect two DTE devices with serial data ports, you connect the output on one computer to the output on the other computer, and the input to the input, so neither computer will actually receive any data. Therefore, you must flip the connections, so each output connects to an input. A cable or adapter that connects output pins to input pins is called a null modem.
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