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Old 01-29-2018, 08:52 PM
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Default Can someone please explain to me what risk/return metrics mean exactly

Iím so confused about task 2 in th FA. I canít find any good information on what risk/return metrics mean exsctly from readings or google.

Does it mean there are risk metrics and return metrics that are different?

Does it mean that each metric can be considered as a risk and as a return metric

Does it mean risk metric divided by return metric

Are mean, CTE, VaR risk metrics or return metrics or both?

Is mean/cte a risk/return metric?

The question is so vague, how are we suppose to know what that means without a clear source reading on risk/return metric.

Please help! Iím so stuck on this.
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Old 01-29-2018, 08:59 PM
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And how do you decide to set boundaries on them?
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Old 01-29-2018, 09:18 PM
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Quote:
Originally Posted by Sir Issac View Post
Iím so confused about task 2 in th FA. I canít find any good information on what risk/return metrics mean exsctly from readings or google.

Does it mean there are risk metrics and return metrics that are different?

Does it mean that each metric can be considered as a risk and as a return metric

Does it mean risk metric divided by return metric

Are mean, CTE, VaR risk metrics or return metrics or both?

Is mean/cte a risk/return metric?

The question is so vague, how are we suppose to know what that means without a clear source reading on risk/return metric.

Please help! Iím so stuck on this.
If I remember correctly standard deviation, VaR, CTE, etc. are defined and discussed pretty well in one or two of the modules (I think 5 and 6 but not 100%). I referenced that pretty heavily.
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Old 01-29-2018, 09:25 PM
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If I remember correctly standard deviation, VaR, CTE, etc. are defined and discussed pretty well in one or two of the modules (I think 5 and 6 but not 100%). I referenced that pretty heavily.
I understand what each of them mean.

I just don’t understand what is a “risk metric” and what is a “return metric”.
I didn’t see that discussed or explained anywhere in the FAP course. Not a single reading that I saw explain how to use risk/return metrics to conduct analysis and what they even mean.
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Old 01-29-2018, 09:37 PM
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Originally Posted by Sir Issac View Post
I understand what each of them mean.

I just donít understand what is a ďrisk metricĒ and what is a ďreturn metricĒ.
I didnít see that discussed or explained anywhere in the FAP course. Not a single reading that I saw explain how to use risk/return metrics to conduct analysis and what they even mean.
The reading specifically talks about each of these and their use as a risk metric as well as the pros and cons of each. I double checked and it is Module 4 and 6.
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Old 01-29-2018, 09:47 PM
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By "return", they just mean tradeoff.

For example, VaR is a risk metric. The return is the need for a higher contribution to fund for VaR(99).
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Old 01-29-2018, 09:52 PM
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Yeah sorry, I neglected to mention the reward side. I would check out slide 102 in Module 4 and 60 in Module 6 - those were particularly helpful for me.
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Old 01-29-2018, 09:54 PM
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How many risk/return metric requirements are people using?
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Old 01-29-2018, 10:03 PM
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How many risk/return metric requirements are people using?
I listed pros and cons for all, but only picked "one metric".
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Old 01-29-2018, 10:05 PM
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I listed pros and cons for all, but only picked "one metric".
Thanks for the help. I have 4. I think that's too many. (I also listed pros and cons for each as asked).
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