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Nicholas Teebagy - The Math Behind Wall Street: How the Market Works and How to Make It Work for You

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title The Math Behind Wall Street How the Market Works and How to Make - photo 1

title:The Math Behind Wall Street : How the Market Works and How to Make It Work for You
author:Teebagy, Nicholas.
publisher:Four Walls Eight Windows
isbn10 | asin:1568581602
print isbn13:9781568581606
ebook isbn13:9780585238029
language:English
subjectInvestments--Mathematics.
publication date:2000
lcc:HG4515.3.T44 1998eb
ddc:332.6/01/51
subject:Investments--Mathematics.
Page iii
The Math Behind Wall Street
How the Market Works and How to Make It Work for You
by Nicholas Teebagy
The Math Behind Wall Street How the Market Works and How to Make It Work for You - image 2
Page iv
2000 Nicholas Teebagy
Published in the United States by:
Four Walls Eight Windows
39 West 14th Street, room 503
New York, N. Y., 10011
U.K. offices:
Four Walls Eight Windows/Turnaround
Unit 3, Olympia Trading Estate
Coburg Road, Wood Green
London N22 6TZ, England
Visit our website at http://www.fourwallseightwindows.com
First printing March 2000.
All rights reserved. No part of this book may be reproduced, stored in a data base or other retrieval system, or transmitted in any form, by any means, including mechanical, electronic, photocopying, recording, or otherwise, without the prior written permission of the publisher.
Library of Congress Cataloging-in-Publication Data:
Teebagy, Nicholas.
The math behind wall street: how the market works and how to make it work
for you/by Nicholas Teebagy.
p. cm.
ISBN 1-56858-160-2
1. InvestmentsMathematics. I. Title.
HG4515.3.T44 1998
332.6'01'51dc21
98-37942
CIP
10 9 8 7 6 5 4 3 2 1
Text design by PennSet, Inc.
Printed in Canada
Page v
To Joan, Christine and Andrea
Page vii
Contents
Introduction
by Amir D. Aczel
xi
Acknowledgments
xix
Chapter 1
Probability and Risk
1
Picture 3
Random Variables
2
Picture 4
Expected Value
4
Picture 5
Standard Deviation and Variance
9
Picture 6
Normal Distribution
10
Chapter 2
Modern Portfolio Theory
17
Picture 7
Expected Return for a Portfolio
18
Picture 8
Covariance and Correlation
20
Picture 9
Variance and Standard Deviation for a Portfolio
26
Picture 10
Portfolio Selection
27
Picture 11
The Single Index Model
33
Picture 12
Systematic and Nonsystematic Risks
36

Page viii
Chapter 3
Beta and Capital Markets
39
Picture 13
Beta
39
Picture 14
Capital Asset Pricing Model
43
Picture 15
The Arbitrage Pricing Theory
47
Chapter 4
Measuring Performance
51
Picture 16
Rate of Return for One Period
52
Picture 17
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