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• Measuring Risk by Dick Stoken

  ARTICLE SYNOPSIS ...There are two common ways to measure performance: the standard deviation of returns and the Sharpe ratio. Here's a third way. How do we measure risk? In the financial industry, the generally accepted method is the standard deviation of returns. A low standard deviation indicates that expected returns vary little from average returns (suggesting less risk), while a high standard deviation suggests that expected returns vary greatly from average returns (implying more risk). The assumption is that stable past returns are less risky, yet many practitioners are uneasy with this concept. FACTORIN...

AUTHOR: Dick StokenDATE: DEC 1998SUBJECT: Money Management