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Portfolio Management CFA L1 2016

PM provides the critical framework and context for all other readings of CFA L1 and builds a strong base for L2 and L3
3.5 (3 ratings)
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383 students enrolled
Created by Tanuja Yadav
Last updated 4/2016
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  • 5 hours on-demand video
  • 2 Supplemental Resources
  • Full lifetime access
  • Access on mobile and TV
  • Certificate of Completion
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This course provides a basis for the coverage of portfolio management at Levels II and III.

The first reading introduces the concept of a portfolio approach to investments. After discussing the investment needs of various types of individual and institutional investors, the reading compares the types of pooled investment management products that are available to investors.

The second reading introduces risk management, including a risk management framework and sources of risk.

The following two readings cover portfolio risk and return measures and introduce modern portfolio theory—a quantitative framework for portfolio selection and asset pricing.

The last reading focuses on the portfolio planning and construction process, including the development of an investment policy statement.

Students will be able to complete the preparation of this subject in a week, even if they are able to devote less than 30 minutes everyday to this topic, with the help of this course. They will also be able to get a better understanding of Portfolio Management which will help them immensely in Level 2 and Level 3.

Who is the target audience?
  • Students enrolled for CFA L1 for the first time
  • Students who had attempted CFA L1 but could not clear due to low performance in Portfolio Management
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What Will I Learn?
Get an understanding on Portfolio Management
Reduce their preparation time for this tough subject to less than one third
Prepare students for CFA L1 subject Portfolio Management which is 7% of the total curriculum and increases significantly in L2 and L3
View Curriculum
  • Ideally students should be enrolled for taking the CFA exam and should be in possession of the official courseware
Curriculum For This Course
Expand All 34 Lectures Collapse All 34 Lectures 05:02:34
Portfolio Management: An Overview
5 Lectures 44:41

This video gives an Introduction to the course and the faculty

Preview 03:12

At the end of this lecture, the student will be able to describe the portfolio approach to investing;

Introduction to Portfolio Theory

At the end of this lecture, the student should be able to describe types of investors and distinctive characteristics and needs of each and describe defined contribution and defined benefit pension plans;

Types of Investors

At the end of this lecture, the student should be able to describe the steps in the portfolio management process;

Portfolio Management Process

At the end of this lecture, the student should be able to describe mutual funds and compare them with other pooled investment products.

Mutual Funds vs Pooled Investments
Risk management: An Introduction
14 Lectures 01:37:37

This lecture defines the Risk management process. Risk management is the process by which an organization or individual defines the level of risk to be taken, measures the level of risk being taken, and adjusts the latter toward the former, with the goal of maximizing the company’s or portfolio’s value or the individual’s overall satisfaction, or utility.

An introduction to Risk Management

This lecture goes into the details of the risk management process. Taking risk is an active choice by boards and management, investment managers, and individuals. Risks must be understood and carefully chosen and managed.
Risk exposure is the extent to which an entity’s value may be affected through sensitivity to underlying risks.
Risk management is a process that defines risk tolerance and measures, monitors, and modifies risks to be in line with that tolerance.

The Risk Management Process

This lecture discusses the risk management framework. A risk management framework is the infrastructure, processes, and analytics needed to support effective risk management; it includes risk governance, risk identification and measurement, risk infrastructure, risk policies and processes, risk mitigation and management, communication, and strategic risk analysis and integration.

Risk Management Framework

This lecture talks about the Risk management framework in an Enterprise context

Preview 09:19

In this lecture we take an enterprise view on Risk Governance. Risk governance is the top-level foundation for risk management, including risk oversight and setting risk tolerance for the organization.Risk identification and measurement is the quantitative and qualitative assessment of all potential sources of risk and the organization’s risk exposures.Risk infrastructure comprises the resources and systems required to track and assess the organization’s risk profile.Risk policies and processes are management’s complement to risk governance at the operating level.Risk mitigation and management is the active monitoring and adjusting of risk exposures, integrating all the other factors of the risk management framework.Communication includes risk reporting and active feedback loops so that the risk process improves decision making.Strategic risk analysis and integration involves using these risk tools to rigorously sort out the factors that are and are not adding value as well as incorporating this analysis into the management decision process, with the intent of improving outcomes.Employing a risk management committee, along with a chief risk officer (CRO), are hallmarks of a strong risk governance framework.Governance and the entire risk process should take an enterprise risk management perspective to ensure that the value of the entire enterprise is maximized.

An Enterprise View of Risk Governance

We understand Risk tolerance through this lecture. Risk tolerance, a key element of good risk governance, delineates which risks are acceptable, which are unacceptable, and how much risk the overall organization can be exposed to.

Risk tolerance

This lecture discusses risk budgeting, which is any means of allocating investments or assets by their risk characteristics.

Risk Budgeting

Financial Risks

Non Financial Risks

Risk Interactions

Risk Drivers

Risk Metrics

Methods of risk modification

Individual's Risk Management
4 Lectures 51:09

At the end of this lecture, the student should be able to calculate and interpret major return measures and describe their appropriate uses; describe characteristics of the major asset classes that investors consider in forming portfolios;

Return measures Part 1

At the end of this lecture, the student should be able to calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data;

Return Measures Part 2

At the end of this lecture, the student should be able to explain risk aversion and its implications for portfolio selection; calculate and interpret portfolio standard deviation; and describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated;

Portfolio Risk Characteristics

At the end of this lecture, the student should be able to describe and interpret the minimum-variance and efficient frontiers of risky assets and the global minimum-variance portfolio; and explain the selection of an optimal portfolio, given an investor's utility (or risk aversion) and the capital allocation line.

Efficient Frontier
6 Lectures 58:59

At the end of this lecture, the student should be able to a describe the implications of combining a risk-free asset with a portfolio of risky assets;

Portfolio of Risky and Risk Free Asset

At the end of this lecture, the student should be able to explain the capital allocation line (CAL) and the capital market line (CML);

capital allocation line (CAL) and the capital market line (CML)

At the end of this lecture, the student should be able to explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk; and explain return generating models (including the market model) and their uses;

systematic and non systematic risk and return generating models

At the end of this lecture, the student should be able to calculate and interpret beta

calculate and interpret beta

At the end of this lecture the student should be able to explain the capital asset pricing model (CAPM), including its assumptions, and the security market line (SML);

Introduction to CAPM and SML

At the end of this lecture the student should be able to calculate and interpret the expected return of an asset using the CAPM; and describe and demonstrate applications of the CAPM and the SML.

Application-CAPM and SML
3 Lectures 23:13

At the end of this lecture the student should be able to describe the reasons for a written investment policy statement (IPS); describe the major components of an IPS; describe risk and return objectives and how they may be developed for a client; and distinguish between the willingness and the ability (capacity) to take risk in analyzing an investor's financial risk tolerance;


At the end of this lecture, the student should be able to describe the investment constraints of liquidity, time horizon, tax concerns, legal and regulatory factors, and unique circumstances and their implications for the choice of portfolio assets; explain the specification of asset classes in relation to asset allocation; and describe the principles of portfolio construction and the role of asset allocation in relation to the IPS.

Principles of portfolio construction

test your knowledge

Final Quiz
18 questions

Answer these questions in less than 15 minutes

Practice Quiz 2
10 questions

Bonus Lecture: Coupon codes and Access to free courses
Bonus Lectures: Extra_For CFA Exam Prep
1 Lecture 11:41

This lecture will help you plan the last month preceding the exam in a more effective and efficient way, thereby increasing your chances to clear the exam.

Preview 11:41
Bonus Lecture
1 Lecture 15:14

At the end of this lecture, the student should be able to explain how risk tolerance affects risk management; and describe methods for measuring and modifying risk exposures and factors to consider in choosing among the methods.

Bonus Lectures: : An Introduction to Risk Management_Old Version
About the Instructor
4.4 Average rating
286 Reviews
10,068 Students
17 Courses
Chartered Financial Analyst

A CFA charter holder, I have extensive experience in the field of F&A outsourcing and have worked on various projects within the F&A Arena. I have 11 years of experience in F&A delivery, handling end to end finance and accounting processes, F&A practice and process improvement. I am also a visiting faculty with International College of Financial Planning, New Delhi where I have taken classes for CFA L 2 and 3. I have my own channel on Youtube on Finance and Investments.

Specialties: Finance, Fixed Income, Treasury, Accounts Payable, Accounts Receivables, Reconciliation, Fixed Asset and Project accounting, Solution development, F&A Training, SOX testing, Fraud risk assessment and Process streamlining.

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