Reading 52. Portfolio Risk and Return: Part I
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Learning Outcome Statements
|Reading 52. Portfolio Risk and Return: Part I|
|1. Major Return Measures|
a. calculate and interpret major return measures and describe their appropriate uses;
|2. Variance and Covariance of Returns|
c. calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data;
|3. Historical Return and Risk|
b. describe characteristics of the major asset classes that investors consider in forming portfolios;
|4. Risk Aversion and Portfolio Selection|
d. explain risk aversion and its implications for portfolio selection;
|5. Portfolio Risk|
e. calculate and interpret portfolio standard deviation;
f. describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated;
|6. Efficient Frontier|
g. describe and interpret the minimum-variance and efficient frontiers of risky assets and the global minimum-variance portfolio;
|7. Optimal Portfolio|
h. discuss the selection of an optimal portfolio, given an investor's utility (or risk aversion) and the capital allocation line.