Important Points for IC 99 - Asset Management Exam
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Inflation risks affect the purchasing power of the investors directly. Inflation is the term used to describe the rate at which prices for goods and services are rising.
Market risk is the possibility of financial losses or reduction in returns due factors that affect the overall performance of the financial markets.
Systematic risk can be mitigated only by being hedged. An individual company cannot control systematic risk. Systematic risk can be partially mitigated by asset allocation.
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used to compare a stocks market risk to that of other stocks. Beta is calculated using regression analysis.
Regression analysis explains how the value of the dependent variable (criterion variable) changes when any one of the independent variables is varied, while the other independent variables are held fixed.
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