Portfolio Risk and Return II

Conquering Portfolio Risk and Return II for the CFA Level 1 Exam

Are you ready to tackle the next level of portfolio risk and return? Join us as we explore Portfolio Risk and Return II, filled with essential concepts to help you conquer the CFA Level 1 Exam. Let’s jump in!

Capital Market Theory

Dive into the depths of capital market theory and explore the special case of the capital allocation line – the capital market line (CML). Unearth how investors, depending on their risk preferences, choose combinations of risk-free and market portfolios. Finally, compare passive and active investment strategies and decide which one ticks your boxes.

► Ready to grasp the fundamentals of capital market theory? Click here.

Systematic vs Unsystematic Risk

Unveil the concepts of systematic and unsystematic risk and their effects on portfolios. Discover how to ward off unsystematic risk with diversification and how systematic risk dictates asset pricing. Lastly, grasp why risk-averse investors should embrace diversification.

► Keen on mastering the dance of risk and return? Click here.

Returns Generating Models and Beta

Unpack the concept of return generating models, from multifactor models like Fama-French and Carhart, to the market model. Learn how to estimate and interpret beta, the key indicator of market risk.

► Eager to master the art of return generating models and beta? Get started here.

CAPM and Security Market Line

Discover the ins and outs of the Capital Asset Pricing Model (CAPM) and the Security Market Line (SML). Understand beta as a systematic risk measure and how to use CAPM and SML to estimate returns, value equities, and analyze stock value.

► Excited to master CAPM and SML? Start your journey here.

Measures of Portfolio Performance

Master the four common approaches to measuring portfolio performance: Sharpe Ratio, M-Squared Measure, Treynor Measure, and Jensen’s Alpha. Understand the specific circumstances in which each measure is most appropriately used, based on the type of risk and the investor’s portfolio diversification.

► Ready to calculate your portfolio performance like a pro? Start here.