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FINANCIAL MARKET COURSES

Portfolio Theory

Courses In This Course

This course looks at the basics of investment and portfolio theory, with particular emphasis on efficiency theory, the Markowitz model, and equilibrium models of asset pricing such as CAPM and APT. Well-known performance measurement models, such as the Sharpe ratio and RAROC, are also explained.

Objectives

In this course, you will explore:

The fundamentals of investment

Market efficiency theory

Classical portfolio theory developed by Markowitz

The capital asset pricing model

Arbitrage pricing theory

The most popular models used to measure portfolio performance

The difference between passive and active investment strategies

Prerequisite Knowledge

A reasonable level of statistical and mathematical understanding is assumed.

Learner Profile

This course is designed for:

New recruits to banking and financial organizations

Portfolio/fund managers

Operations and support staff

Sales and marketing executives

Finance and accounting staff

IT staff

Compliance and regulatory staff

  •    MARKET EFFICIENCY - THE CONCEPT

    Overview

    One of the key factors when building a theoretical framework required for making rational financial decisions and policies is an understanding of the concept of market efficiency. This concept is one of the most widely studied and contentious areas in the financial world today. This course explains in detail the characteristics of an efficient market, describing the random walk theory and examining the different forms of the efficient market hypothesis and their various implications for analysts, management and investors. It also justifies the concept of market efficiency despite the fact that there are certain investors who appear capable of generating substantial profits.

    Course Duration

    95 mins

    Prerequisite Knowledge

    Investment - An Introduction

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  •    MARKET EFFICIENCY - THE EVIDENCE

    Overview

    Mindful of the contentious nature of the theory of market efficiency, this course describes the main research findings that either support or contradict the weak form of the Efficient Market Hypothesis over the years. It summarizes the main results of studies that test the semi-strong form of the Efficient Market Hypothesis and explains and interprets the studies used to test its strong form. The course also provides different examples of market inefficiencies and explains the findings of studies supporting their presence.

    Course Duration

    115 mins

    Prerequisite Knowledge

    Market Efficiency - The Concept

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  •    PORTFOLIO THEORY - THE MARKOWITZ MODEL

    Overview

    This course provides a description of the pioneering work of Harry Markowitz on portfolio theory. Beginning with the basic concepts required to understand modern portfolio theory, the course then moves on to discuss the relationship between individual securities and portfolios, the benefits of a diversified portfolio and the decision as to the optimal portfolio.

    Course Duration

    55 mins

    Prerequisite Knowledge

    Investment - An Introduction

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  •    PORTFOLIO THEORY - SINGLE-INDEX &

       MULTI-INDEX MODELS

    Overview

    Single- and multi-index models developed as alternatives to the Markowitz model for calculating the variance (risk) of a portfolio. Beginning with William Sharpe’s diagonal, this course describes single-and multi-index models in detail and provides a comparison of these with the theory of Markowitz.

    Course Duration

    50 mins

    Prerequisite Knowledge

    Portfolio Theory - The Markowitz Model

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  •    PORTFOLIO THEORY - THE CAPITAL ASSET

       PRICING MODEL (CAPM)

    Overview

    The principles of the capital asset pricing model (CAPM) are central to portfolio building. Although more sophisticated models of risk and return have been proposed since its arrival in the mid-1960s, few more influential or intuitively appealing financial models have ever been developed. This course describes in detail the theory of CAPM and looks at some of the empirical evidence of the validity of the model.

    Course Duration

    90 mins

    Prerequisite Knowledge

    Portfolio Theory - Single-Index & Multi-Index Models

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  •    PORTFOLIO THEORY - ARBITRAGE PRICING

       THEORY (APT)

    Overview

    This course examines in detail the arbitrage pricing theory (APT) model, introduced by Stephen Ross in 1976 as a different equilibrium model that relaxes many of the assumptions of CAPM. The APT model does not depend on the need for an underlying market portfolio, instead operating on the key assumption that the returns on a security are generated by an identical process to that used by single- and multi-index models. Beginning by comparing the assumptions of the APT model with those of CAPM, this course describes how the arbitrage process works and examines the merits of APT as a capital asset pricing model.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Portfolio Theory - The Capital Asset Pricing Model (CAPM)

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  •   PORTFOLIO THEORY - PERFORMANCE

      MEASUREMENT MODELS

    Overview

    Beginning with the Sharpe ratio, which is the seminal work in the area of portfolio performance, this course looks at a number of well-known rules that are used to choose between risky investments. In the securities markets, billions of dollars are shifted from one form of investment to another on the back of the results generated by these performance measures. It is therefore imperative that you understand all these rules, any assumptions underlying them and their relative advantages and disadvantages.

    Course Duration

    120 mins

    Prerequisite Knowledge

    Investment - An Introduction

    Portfolio Theory - The Markowitz Model

    Portfolio Theory - Single- & Multi-Index Models

    Portfolio Theory - The Capital Asset Pricing Model (CAPM)

    Portfolio Theory - Arbitrage Pricing Theory (APT)

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  •   PORTFOLIO MANAGEMENT - PASSIVE & ACTIVE

      STRATEGIES

    Overview

    A portfolio's objective is dependent upon an investor's future cashflow requirements and their tolerance for risk. Whatever the objective, there are two basic strategies to choose from – passive or active. This course starts by taking a detailed look at indexing, a strategy adopted by the passive management community. We then move on to discuss the market timing mentality of active portfolio managers. We conclude by examining an alternative approach to active management.

    Course Duration

    65 mins

    Prerequisite Knowledge

    Investment - An Introduction

    Portfolio Theory - The Markowitz Model

    Portfolio Theory - Single- & Multi-Index Models

    Portfolio Theory - The Capital Asset Pricing Model (CAPM)

    Portfolio Theory - Arbitrage Pricing Theory (APT)

    Portfolio Theory - Performance Measurement Models

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