Volatility is a measure of how the price of an asset – be it a stock, an option or a fund - changes. Volatility tracks how much the price moves and also how fast it changes. Beta is a commonly used statistical measure that represents volatility, and the higher beta is, the greater the risk. There’s usually a reference index such as the S&P 500 and if a stock perfectly tracks the index, it is said to have a beta of 1.0. If it changes more than the index, be it on the up or downside, it is a high beta stock. For example, a stock with a beta of 1.5 means that historically, it has moved 150% for every 100% move in the benchmark index. Mutual funds nowadays provide free volatility measures so you can get a good feel for how stable the fund is year in and year out.
Interest rates are the raw material used in manufacturing annuities. Rates are currently very low--the 10 year treasury note is hovering around 3.4 percent and 30...
What is the probability that a given level of spending is realistic or “sustainable” throughout one’s retirement?
Stated differently, what is the likelihood that a given level of retirement spending is fraught with...
Volatility is a fact of life when investing in the stock market.
As indicated in the chart below, the Chicago Board Options Exchange volatility index has had six meaningful spikes (index levels exceeding 30) since 1990, with by far and away the most extreme spike occurring over the past couple of years.
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