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FINANCIAL MARKET COURSES

Deriving an Optimal Portfolio

This course explains how investors construct portfolios to achieve an optimal trade-off between risk and return. According to modern portfolio theory (MPT), rational investors are only interested in those portfolios which provide the highest expected return for a given level of risk (or which provide the lowest level of risk for a given expected return). Such portfolios are referred to as 'dominant' or 'efficient' portfolios and lie on a curve known as the efficient frontier. By drawing the efficient frontier, we can derive the optimal portfolio.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Calculate the risk and return of both individual stocks and portfolios

    Derive the minimum variance portfolio, the efficient frontier, and the optimal portfolio on that frontier

  • COURSE OUTLINE

    Topic 1: Risk & Return for Individual Assets

    Using Historical Data

    Calculating Volatility

    Topic 2: Risk & Return for Portfolios

    Calculating Expected Return

    Covariance

    Calculating Portfolio Volatility

    Topic 3: Deriving the Optimal Portfolio

    Minimum Variance Portfolio

    Efficient Frontier

    Optimal Risky Portfolio

    Capital Allocation Line

    Optimal Complete Portfolio

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    90 Minutes

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