CFA Level 1 - Portfolio Management: Risk and Return (Parts 1 & 2) | Modern and Capital Market Theory

Calculate and interpret the mean, variance, and covariance (or correlation) of asset returns
based on historical data.
Calculate and interpret portfolio standard deviation.

Describe the effect on a portfolio's risk of investing in assets that are less than perfectly
correlated. Describe and interpret the minimum-variance and efficient frontiers of risky assets and the
global minimum-variance portfolio.
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.