Final Exam: The Investment Metrics Gauntlet

This is the gauntlet. Every tool you sharpened across five lessons gets pointed back at you — total gain and compound growth, the bumpiness and the worst fall, the ratios that price in risk, the line between skill and a rising tide. Some questions hand you numbers and a confident-sounding wrong answer; do the arithmetic and pick the conclusion that actually follows.

How this exam works

This is a graded exam. Questions come one at a time. Once you submit an answer it is final — there is no going back, no second try, and a wrong answer simply fails that question. Your score stays hidden until the end, where you need 70% to pass. Read every option twice before you commit.

Question 1 of 25

You put in $2,000, sold for $2,400, and collected $200 in dividends along the way. What is your ROI?

25%20%30%12%

Select an answer to continue.

Course Recap

Chunk everything you were tested on into a single picture — four questions, the metrics that answer each, and the trap each one defuses:

Big picture

The investment metrics gauntlet

Skill or luck?
- How much did it grow?
  - ROI — total gain, blind to time
  - CAGR — geometric yearly rate
  - Trap: arithmetic average overstates volatile growth
- How risky was it?
  - Volatility — typical wobble, symmetric
  - Max drawdown — worst peak-to-trough fall
  - Trap: deep drawdowns need disproportionate recoveries
- Worth the risk?
  - Sharpe — excess ÷ total volatility
  - Sortino — excess ÷ downside deviation
  - Calmar — CAGR ÷ worst drawdown (geometric)
- Skill or the tide?
  - Beta — co-movement with the market
  - Alpha — return beyond CAPM = skill
  - Trap: high beta + negative alpha = luck/leverage

Four questions, every metric: how much it grew, how risky it was, whether the return was worth the risk, and whether it was skill or the market's tide.

Key Takeaways

You passed if…

You read ROI and CAGR as different jobs — total gain vs. the geometric yearly rate — and never let an arithmetic average disguise the volatility drag.
You treat volatility and drawdown as complementary, and you instinctively reach for 1/(1 − d) − 1 when someone shrugs off a deep fall.
You can keep Sharpe, Sortino and Calmar straight: two arithmetic ratios differing in the denominator, plus Calmar — the geometric, drawdown-based odd one out.
You separate the tide from the rowing: beta is the ride, alpha is the skill, and a fat return on a high beta with negative alpha is luck (or leverage) wearing a costume.
Above all, you judge a fund by reading the numbers together, and you can say the one line that summarizes the whole course: a big return on a brutal ride is luck; a solid return on a calm ride is quality.