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 November 20th, 2012, 01:07 PM #2 Newbie   Joined: Oct 2012 Posts: 13 Thanks: 0 Re: Profitability of an Investment Will someone reply to this, please?
 November 20th, 2012, 04:27 PM #3 Senior Member   Joined: Aug 2008 From: Blacksburg VA USA Posts: 352 Thanks: 7 Math Focus: primes of course Re: Profitability of an Investment well, nothing I read in the problem relates profitability between the 2 strategies or between individual securities. So, for a,b,c,d I answer "cannot be determined". Obviously these next numbers are not "independent" but they only illustrate a sample scenario where only the strategy 1 is profitable, but each security has similar distribution. (The formatting will not match my original after posting but hopefully it's bearable) Time RETURN Period Sgl Secur SecurityA SecurityB SecurityC SecurityD SecurityE 1 1.00% -7.00% -7.00% -6.00% -5.00% -4.00% 2 0.00% -6.00% -7.00% -7.00% -6.00% -5.00% 3 1.00% -5.00% -6.00% -7.00% -7.00% -6.00% 4 2.00% -4.00% -5.00% -6.00% -7.00% -7.00% 5 3.00% -5.00% -4.00% -5.00% -6.00% -7.00% 6 3.00% -6.00% -5.00% -4.00% -5.00% -6.00% 7 2.00% -7.00% -6.00% -5.00% -4.00% -5.00% OR, maybe I missed the entire concept
 November 20th, 2012, 04:29 PM #4 Newbie   Joined: Mar 2012 Posts: 25 Thanks: 0 Re: Profitability of an Investment Those two strategies have the same expected value, but #2 has a lower variance. Since the avarages will be the same, and if your definition of a good investment is greater than zero expected value, then #1 is good if and only if #2 is; same for being bad. However daily expected value > 0 doesn't mean that it's a good investment over the long run, so I'm confused by your question.
 November 21st, 2012, 08:46 AM #5 Newbie   Joined: Oct 2012 Posts: 13 Thanks: 0 Re: Profitability of an Investment Sorry, but I don't understand either of your replies. This question has to do with compounding over one day versus over many days. One day is likely to be arithmetic, and compounding over many days will lead to a geometric distribution. However, I don't know how to put that into writing. Kiuhnm, can you help a brother out?
 December 18th, 2012, 11:35 PM #6 Newbie   Joined: Dec 2012 Posts: 3 Thanks: 0 Re: Profitability of an Investment In order to get a success in this, a long term view must be taken of financial planning. The aim here is to frequently manage your finances while at the same time negotiating and responding to any problems that can arise. best Mutual funds in India

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