CFA Level 2: Portfolio Management – Introduction- The portfolio management section contains a lot of material and much of it might never appear on the...

## COURSE

## Portfolio Management L2

- Mean-variance analysis gives investors a framework to assess the tradeoff between risk and return as...
- ## Expected Return for a Two Asset Portfolio The expected return of a portfolio is equal to the wei...
- Two asset classes (stocks and bonds for example) can be combined with varying proportions to create ...
- A diversification benefit exists when a [portfolio’s standard deviation](https://financetrain.com/ex...
- The discussion of [diversification benefits](https://financetrain.com/diversification-benefits/ "Div...
- On a graph, the [Capital Allocation line (CAL)](https://financetrain.com/the-capital-allocation-line...
- - The Capital Asset Pricing Model (CAPM) assumes only one efficient portfolio, the market portfoli...
- We can use the [Sharpe Ratio](https://financetrain.com/sharpe-ratio-for-measuring-return-on-risk/ "S...
- When a portfolio manager considers a security for addition to a portfolio within the construct of [m...
- Betas calculated purely based on historical data are unadjusted betas. However, this [beta](https://...
- While the Market Model uses only a single risk factor to price a security’s return, Multifactor Mode...
- - Arbitrage Portfolio Theory (APT) came along after [CAPM](https://financetrain.com/the-capital-as...
- ## Tracking portfolios **Tracking Portfolio:** A portfolio assembled with securities that will repl...
- - [Modern Portfolio Theory](https://financetrain.com/modern-portfolio-theory/) (MPT) is rooted in ...
- An efficient market is one, which is able to absorb new information into the security prices instant...
- ## Domestic CAPM - An efficient market allows investors to diversify away company/security specif...
- - Nominal Exchange Rates represent how many units of one currency can be exchanged for one unit of...
- - The ICAPM attempts to explain the required return on a risky asset, measured in its own local cu...
- - Currency exposures measure, in the investor's domestic currency, an asset return's sensitivity t...
- The stock value of a company will be affected by the changes in the real value of its local currency...
- - Both assume unlimited borrowing and lending at the risk free rate. - [ICAPM](https://financetr...
- The domestic activity in an economy is related to its exchange rate movements. In the traditional th...
- Two theories attempt to explain the relationship between exchange rates, real economic activity, and...
- - The ICAPM is used by some investors to value any and all risky assets on a global basis. - The...
- - Two arguments can be used to justify active portfolio management for investors: 1. Given that ...
- - Treynor and Black developed a portfolio optimization model that seeks to maximize a portfolio's ...
- ## The Portfolio Perspective In studying the [mean-variance analytical](https://financetrain.com/me...
- The IPS is the document that governs how an investor’s portfolio is managed. - Designing an IPS i...

## LESSONS

Mean-Variance Analysis Assumptions

Expected Return and Variance for a Two Asset Portf...

The Minimum Variance Frontier & Efficient Frontier

Diversification Benefits

The Capital Allocation Line – Introducing the Risk...

The Capital Market Line

CAPM & the SML

Adding an Asset to a Portfolio – Improving the Min...

The Market Model for a Security’s Returns

Adjusted and Unadjusted Beta

Multifactor Models

Arbitrage Portfolio Theory (APT) – A Multifactor M...

Risk Factors and Tracking Portfolios

Markowitz, MPT, and Market Efficiency

International Capital Market Integration

Domestic CAPM and Extended CAPM

Changes in Real Exchange Rates

International CAPM (ICAPM) - Beyond Extended CAPM

Measuring Currency Exposure

Company Stock Value Responses to Changes in Real E...

ICAPM vs. Domestic CAPM

The J-Curve – Impact of Exchange Rate Changes on N...

Moving Exchange Rates and Equity Markets

Impacts of Market Segmentation on ICAPM

Justifying Active Portfolio Management

The Treynor-Black Model

Portfolio Management Process

The Investor Policy Statement