Learning Module 2 of Portfolio Management 8–12% of the exam
Portfolio Risk and Return: Part II
11 lessons. About 0 minutes in cram mode, 0 minutes in full.
Lessons for this module are being written. The outcomes and lesson plan below are final.
Lessons
- 1 Capital Market Theory: Risk-Free and Risky Assets
Coming soon
- 2 Capital Market Theory: The Capital Market Line
Coming soon
- 3 Capital Market Theory: CML - Leveraged Portfolios
Coming soon
- 4 Systematic and Nonsystematic Risk
Coming soon
- 5 Return Generating Models
Coming soon
- 6 Calculation and Interpretation of Beta
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- 7 Capital Asset Pricing Model: Assumptions and the Security Market Line
Coming soon
- 8 Capital Asset Pricing Model: Applications
Coming soon
- 9 Beyond CAPM: Limitations and Extensions of CAPM
Coming soon
- 10 Portfolio Performance Appraisal Measures
Coming soon
- 11 Applications of the CAPM in Portfolio Construction
Coming soon
What the exam expects you to do
- Describe the implications of combining a risk-free asset with a portfolio of risky assets.
- Explain the capital allocation line (CAL) and the capital market line (CML).
- Explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk.
- Explain return generating models (including the market model) and their uses.
- Calculate and interpret beta.
- Explain the capital asset pricing model (CAPM), including its assumptions, and the security market line (SML).
- Calculate and interpret the expected return of an asset using the CAPM.
- Describe and demonstrate applications of the CAPM and the SML.
- Calculate and interpret the Sharpe ratio, Treynor ratio, M2, and Jensen’s alpha.