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    • Profile photo of John Moffat says

      Its a measure of the riskiness – the greater the figure the more risky.

      However do appreciate (as it says in the lecture notes) that these calculations can no longer be asked in the exam. You are only expected to understand the idea of portfolio theory without calculations.

      I have left the lectures because I think the idea makes more sense if you have seen a few numbers.

      • Profile photo of anonymous says

        Ok I get that. Thank you very much. Examples are useful for understanding the concept and I appreciate that. Thank you again.

  1. avatar says

    Hi you say in this lecture the formula for combining investments is given in the exam but I don’t see it on the past papers I have – is this no longer the case?

    • Profile photo of John Moffat says

      It is no longer the case. The reason is that (as you will have read in the Lecture Notes that go with the lecture) the examiner has said that he will no longer ask for calculations on portfolio theory.

      The only reason that I have left the lecture in, is that he has said that he does expect you to understand the ideas in portfolio theory. I think the best way of understanding is to see the examples, even though (again) you will not be expected to do calculations in the exams.

    • Profile photo of John Moffat says

      As it says in the Lecture Notes that go with the lectures, you are expected to understand and explain portfolio theory but you will not be asked calculations. The calculations are in the lecture just to make sense of the discussion.

      ( We do not have lectures on this website that are not relevant to the next exam )

      • Profile photo of John Moffat says

        Ooops – I mistyped my previous reply (and I have now corrected it!!!)

        All our lectures for all papers are relevant for the next exams (otherwise we would remove them) and where relevant we add more lectures (as I have done recently for P4).

  2. avatar says

    If i were to rank a list of my best lecturers in my entire study course, i will definitely list Mr John Moffat the top, the video lecturers are straight to the point and simplified that it makes it easier for understanding. I really appreciate the entire team of open tuition taking all the effort,time and commitment to give this kind of opportunity free of charge accessible to any students globally.

    • Profile photo of John Moffat says

      Yes it is possible. The example is simply to show that is is possible to mix two investments and end up with lower risk than either (but that is not always going to be the case :-) )

      Do remember that you can not be asked portfolio calculations – you can only be asked to explain the principles. I only go through the examples to (hopefully) make the idea more clear.

    • Profile photo of John Moffat says

      If you read the last paragraph of the introduction to the chapter in the Course Notes, I make it clear that you are now only expected to know the principles involved and will not be required to use the formulae.
      As I explain in the note, I have left the examples in the notes just to help make the principles clear.

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