Very nicely Explained.You are a senior to me in knowledge I must admit that.Respect to Your work.A nice channel on Advance level of Finance. Keep doing Your work.we are following.Thanks
shouldn't you convert the annual expected return like this?: (1+ annual return)^15 ? because now you are summing returns, which doens't give the same result as compounding.
Because the time horizon is more than 1 year, so you have to scale the return and std deviation based on the time horizon to get the minimum return that can be achieved 95% of the time, then you annualize it
thank you so much, you changed my life for this kind of knowledge
Happy to hear that, MK!
Very nicely Explained.You are a senior to me in knowledge I must admit that.Respect to Your work.A nice channel on Advance level of Finance. Keep doing Your work.we are following.Thanks
Thanks a ton, SIMFINSO. Keep up the good work with your channel too.
shouldn't you convert the annual expected return like this?: (1+ annual return)^15 ? because now you are summing returns, which doens't give the same result as compounding.
why do we find MER as a simple return instead of a compounded value? ie (1+0.56.7410)^(1/15) - 1?
Ya why is the returns not geomatrically compounded? e.g.(1+annual)^15 haha other den that very clear!
Why can't we just directly use the annual mean& std, like (8.2%-1.65*10.4%) to get the 95% probability one-year MER?
Because the time horizon is more than 1 year, so you have to scale the return and std deviation based on the time horizon to get the minimum return that can be achieved 95% of the time, then you annualize it