[Series 65] 44, Alpha Beta and Standard Deviation

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - Standard deviation measures an investment's total risk, which is the combination of systematic and unsystematic risk. - Beta is a narrower metric that measures only the systematic, or market, risk of an investment relative to a benchmark like the S&P 500. - Alpha represents the excess return an investment earns above its expected return, given its beta, serving as a measure of manager performance. - R-squared indicates how much of a portfolio's movement is explained by its benchmark, and a high R-squared is necessary for alpha and beta to be considered reliable statistics. - A common Series 65 exam trap involves a security with a high alpha but a low R-squared, which implies the alpha is not a meaningful indicator of performance. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep