Quantitative Investment Concepts and Measures of Investment Returns

Free CFP Exam lesson in Investment Planning. 20 min read, ~2,935 words.

Arithmetic mean forecasts single periods; geometric mean measures actual compound growth. Geometric is always less than or equal to arithmetic. TWR = manager performance (strips cash flows); DWRR/IRR = investor experience (includes cash flows). R-squared 0.70 = Treynor (beta); R-squared < 0.70 = Sharpe (std dev). This single check answers...