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Learn Portfolio theory and asset allocation

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B Basic

Measuring return9m
Risk beyond volatilityPro9m
Correlation and the efficient frontierPro10m

A Advanced

CAPM, beta, and alphaPro10m
FactorsPro10m
Strategic asset allocation and alternativesPro11m
Risk budgeting and rebalancingPro10m

FlashcardsPro0/20
Basic quizPro80% passes
Advanced quizPro80% passes
Terms

Portfolio theory and asset allocation

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of 7 lessons: 0
of 20 cards

Flashcards Start the first lesson

How returns compound, what risk really costs, why correlation is the only free lunch, and how a multi asset team turns all of it into a target mix and keeps it there.

BBasic3 lessons

1Measuring returnThe average of yearly returns is not what an investor earns. Compounding, volatility, and cash flows in and out all change the number, and interviewers test whether you know which one to quote.9 min
2Risk beyond volatilityProVolatility treats a big up day like a big down day. Clients do not. Drawdowns, downside deviation, and value at risk describe the losses people actually feel.9 min
3Correlation and the efficient frontierProCombining assets that do not move together lowers risk without giving up return. The efficient frontier is the set of mixes where you cannot do better on one without doing worse on the other.10 min
Basic quizPro10 questions, 80% passes

AAdvanced4 lessons

4CAPM, beta, and alphaProCAPM says the only risk the market pays for is the risk you cannot diversify away. It gives a required return for any asset and a yardstick for whether a manager added anything.10 min
5FactorsProMost of what looks like stock picking skill is exposure to a handful of broad return drivers. A factor model separates the exposure, which is cheap to buy, from the alpha, which is not.10 min
6Strategic asset allocation and alternativesProThe long term mix of asset classes explains most of a diversified portfolio's swings. Setting it means forecasting returns and risks, and deciding how much illiquidity the client can live with.11 min
7Risk budgeting and rebalancingProDollar weights hide where risk sits. A 60/40 portfolio is mostly an equity bet. Risk budgeting allocates risk on purpose, and rebalancing keeps the mix from drifting into a different portfolio.10 min
Advanced quizPro10 questions, 80% passes