If you want to measure the increase of your capital over time, you can calculate the difference between the initial value and the current value. Example: Let’s say you made an investment in a stock one year ago. Its price was 100 Euro. Today, one year later, the price is: 110 Euro Now calculate the capital growth rate: Formula: Todays […]
IIf you buy a bond, you become a lender to the bond issuer. In return for lending money, you, in many cases, receive interest payments. Against this background, one should remember that the interest payments one gets closer to today are more valuable than those one receives in the distant future. E.g., if you get one euro tomorrow, it is […]
Quck analysis: If a data distribution is skewed the data is not distributed symetricaly. An example that is often used to show left skewnes is the salary distribution in most capitalist countries. There are some high earners which account for a higher mean then median Eg lets asume in a country there are 5 people which have the following incomes […]
The t-test shows if your expected mean assumption is reasonable or not. With a t-test you try to answer the following question: How likely is your mean estimate (eg. 1,36%), if the mean of the total population would be..% (eg.1,5%) -> in other words is your sample mean close enough to the total popultion mean that you can assume for […]
The confidence interval shows you an interval within which the actual (presumed but unknown) mean of a population lies within a specified probability of 1-Alpha. (Alpha is the risk of making a wrong decision eg. 1% in case of a 99% confidence interval) You can define different confidence intervals ( eg. a confidence interval of 90% or 99%)If we find […]
Example: Calculating the median and mode for returns of an EM fund.
The square root: you ask yourself, which number has been multiplied with itself that for example 4 (or any other value) is the result? So you have 4 Which number mulitpled x * x results in the value 4? As you can imagine 2*2 = 4, so the solution is 2 -> The square root of 4 is 2 Example […]