The most comprehensive educational resources for finance

Constructing an Efficient Frontier

The concept of Efficient Frontier was first introduced by Harry Markowitz in his paper on Portfolio Selection (1952 Journal of Finance). The portfolio theory considers a universe of risky investments and explores these possible investments in order to find the optimum portfolio. So, for a given amount of risk, MTP explains how select a portfolio

Mean, Variance, Standard Deviation and Correlation

While making an investment decision, it is important to assess the risk/return profile of any investment. The relation between risk and return raises three basic questions: How do I estimate the percentage return that I will receive on an investment? How much risk does an asset add to a portfolio? What can I do to

Interest Rates and Time Value

This is the introduction section for PRM Exam I. It presents the fundamental concept that money has a time value that results from investment opportunities. It covers basic measures of interest rates, the value of time and compounding methods. These foundational concepts have relevance for the valuation of all financial assets. Learning Outcome Statements: Differentiate