Page 48 - FINAL CFA SLIDES JUNE 2019 DAY 2
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LOS 8.e: Calculate and interpret measures of Session Unit 2:
central tendency, including the population mean, 8. Statistical Concepts and Market Returns
sample mean, arithmetic mean, weighted average
mean, geometric mean, harmonic mean, median,
and mode, p.138
Any Limitations of AMs, p.140? Unusually large or small values can have a disproportionate effect on it:
1, 2, 3, and 50 = 14 -really?
Can we fix this? Weighted mean ! Remember WACC?
Example: Weighted mean as a portfolio return: A portfolio consists of 50% common stocks, 40%
bonds, and 10% cash. If the return on common stocks is 12%, the return on bonds is 7%, and the return
on cash is 3%, what is the portfolio return?
