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What Are the Two Important Elements of a Validity Coefficient

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What are the two important elements of a validity coefficient?


Definitions:

Compound Return

The increase in value of an investment due to the earnings on both the principal and the accumulated earnings over previous periods.

Portfolio

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual, exchange-traded, and closed funds.

Expected Return

The anticipated return on an investment, considering the probabilities of various outcomes.

Downside Risk

The potential loss that could occur in an investment due to adverse price movements.

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