A zoom-in, zoom-out, connect-the-dots tour of Investment and Portfolio Theory
Let's parse that
- 'connect the dots': Investments and Portfolio Theory are a function of risk, return and the trade-offs achieved between them. The factors that affect these are interconnected. If you get a hang of the relationships, Portfolio Theories would seem like a piece of cake.
- 'zoom in': Getting the details is very important in portfolio theory - the risk-return trade-off are the core basis for all the theories and because they are inversely related, getting the concepts right can be a little tricky. This course gets the details right where they are important.
- 'zoom out': Details are important, but not always. This course knows when to switch to the big picture.
What's Covered:
- Investments introduced: Returns, elements of return, time value, inflation and risk premium and how each of these change returns.
- Various investment instruments: term deposits, bonds, stocks discussed in detail bringing out the frequency and quantum of return, sources of return and quantum of risk from each of the assets.
- Markowitz Modern Portfolio Theory: Five elements of the theory explained: Risk Averse, Portfolios, Risk-Retun Trade off, Measuring Return and Measuring Risk.
- Measuring Return: Explained steps for measuring individual assets and portfolio returns using random variables and probability theory along with logical explanation for each step
- Measuring Risk: Explained measuring risk of individual assets and portfolio risk along with step-by-step procedure for variance, standard deviation, covariance, correlation coefficient and the reason for using these.
- Types of Return: Systematic and Unsystematic risks, types of each and effect on investments
- Diversification of Investment: Learn by example how diversification reduces Unsystematic risk and what Market Portfolio is.
- Risk Free Assets: Real and Nominal Risk free rate of return including the components
- CAPM: The 4 components of CAPM including in-depth on types of Beta and how investment decisions using CAPM are taken
- Equity and Entity Valuation: A teaser on CAPM and WACC used for equity valuation.
Talk to us!
Mail us about anything - anything! - and we will always reply :-)
