Seminar: Timely Topics for Today’s Business World Mr. Bernstein Risk January 2015.

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Seminar: Timely Topics for Today’s Business World Mr. Bernstein Risk January 2015

Seminar: Timely Topics for Today’s Business World Mr. Bernstein Common Risk Measurements: Standard Deviation A measure of the dispersion of a set of data from its mean - the degree to which individual values vary from the distribution mean. The higher the number, the greater the risk. Standard deviation is calculated as the square root of variance. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. 2

Seminar: Timely Topics for Today’s Business World Mr. Bernstein Common Risk Measurements: Volatility The relative rate at which the price of an investment moves up and down, found by calculating the annualized standard deviation of daily change in price. The amount of uncertainty or risk about the size of changes in a security's value. A higher volatility means that a security's value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security's value does not fluctuate as dramatically. 3

Seminar: Timely Topics for Today’s Business World Mr. Bernstein Example: One-year Single Stock Volatility 4

Seminar: Timely Topics for Today’s Business World Mr. Bernstein Common Risk Measurements: VaR A technique used to estimate the probability of portfolio losses based on the statistical analysis of historical price trends and volatilities. VaR is often quoted as the dollar value of mark-to- market losses in the case of a 2 standard deviation event. 5

Seminar: Timely Topics for Today’s Business World Mr. Bernstein Historical Return Histogram (HRH) 6

Seminar: Timely Topics for Today’s Business World Mr. Bernstein Historical Volatility Table (HVT) 7

Seminar: Timely Topics for Today’s Business World Mr. Bernstein Historical Volatility Graph (HVG) 8