Quick reference items are fully complete for all Level I CFA® topics.
Weak-form efficient market hypothesis
Weak-form of market efficiency states that current market prices fully reflect all past market data. This implies that investors cannot predict future price changes by extrapolating prices or patterns of prices from the past. In other words, technical analysis, which are strategies used to earn positive risk-adjusted returns by using historical price and volume data, cannot work in such a ...
Weighted Average Cost of Capital
The weighted average cost of capital of the firm is the sum of the weight of each component multiplied by their respective rates.
Weighted mean
An average in which each observation is weighted by an index of its relative importance. ∑wixi / n
Winsorized mean
Similar to the trimmed mean, but instead of discarding the highest and lowest observations, we substitute a value for them. For example, to calculate a 90% winsorized mean, we would determine the 5th and 95th percentile of the observations. Any values lower than the 5th percentile will be substituted with 5th percentile value, and any values greater than the 95th ...
Working capital
Working capital = Current assets – Current liabilities Insufficient working capital may indicate liquidity problems. Too much working capital may be an indication of inefficient use of assets.
Working Capital Investments
Cash used in a company’s day-to-day business activities. Compare: Fixed Capital Investments
Working capital turnover ratio
Measures the efficiency of a firm in generating revenue using its working capital. Total asset turnover = Revenue / Avg Working Capital See also: Total asset turnover, Fixed asset turnover
