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November 20, 2017 at 9:14 pm
Hi, Example 5 requires the use of the formula, but we are being told we can not be expected to use the forumla in the examination. Is it more example 3 that we could be questioned on in working out the average return and total risk?
John Moffat says
November 21, 2017 at 1:17 pm
No you could not. As it says in the lecture notes, you cannot any longer be asked for portfolio theory calculations. However you are expected to understand the basic idea and that is the reason that I have left this lecture up.
June 30, 2015 at 10:02 am
Excellent Lectures!! Thank you so much for putting up these lectures. 🙂 🙂 🙂
September 6, 2014 at 5:28 pm
Hi Mr John,
You mentioned in the lecture that you will provide a checklist of the formulae that will need to be learned and the ones that are on the sheet. I already have the formula sheet, I wonder if the list of formulas that I need to learn by heart is available ? Other wise, I will just make sure to compile them all throughout your lectures.
September 6, 2014 at 6:18 pm
Oh dear – I don’t remember saying that I would provide a checklist.
However, it is less relevant these days. As I have written in the Course Notes, the examiner has said that he will not test calculations on portfolio theory and so those formulate are not needed. I have only left the examples there because I think they help understand what is happening (and he can expect you to be able to write about the idea).
September 8, 2014 at 12:55 pm
Oops! Somehow I commented in the wrong comment!
Kindly see my response below!!
May 20, 2014 at 1:07 pm
The additional question discussed here is not in the back of the June 2014 notes. Which of the past papers was it on?? Thanks, Matthew
May 20, 2014 at 1:19 pm
Sorry – it was a very long time ago. It has been removed from the notes because (as the notes say) you can no longer be asked for calculations on portfolio theory. You can only be expected to be aware of the idea.
September 8, 2014 at 12:53 pm
Hi Mr John – Yeah, I realised that it was unlikely but it is better to be safe than sorry. Ok sure I understand now, the examples were helpful and I am glad to know that I will only be requested to write when it comes to portfolio theory.
May I ask, I can also see formulas in the next chapter (capital asset pricing model) which are not in the formula sheet, do I take it as a rule that any formulas included in the notes but not on the formula sheet are important and need to be memorised by heart because they could come in the exam ? (even if unlikely).
I tend to assume that anything in the notes is relevant, so right now I am assuming that any formulas included there should be memorised by heart if not provided in the formula sheet.
Thanks a lot and 🙂
September 8, 2014 at 1:24 pm
The extra formulae are unlikely. but those in the CAPM chapter just could be needed.
September 8, 2014 at 1:44 pm
Many thanks for your quick response! I will memorise them just to be safe but good to know that it is unlikely to have them 🙂
June 25, 2013 at 1:22 pm
in the examples we have had so far we are combining two investments or chose one from a group to combine with an already existing investment. in real life we may have to combine more than 2 investments. is there a formula for this? thank you
July 15, 2013 at 3:43 pm
i’m thinking you could improve the given formula. since the current formula was given as ‘WaSa+WbSb…’ only, maybe we could add ‘WcSc’ so forth?
November 11, 2013 at 3:57 pm
It could be, but please make sure you have noticed that the Course Notes stress that the examiner has said that he will no longer ask portfolio calculations (and will no longer therefore give the formula). However he can expect you to be able to explain the idea. That is the reason that I have left the chapter in the notes (and the lectures) – not because you can be asked for the arithmetic, but because it might help you make sense of the idea behind it.
February 26, 2013 at 1:35 pm
The Example you are mentioning on page no 155 I’m unble to find it there!
May 22, 2012 at 4:47 am
Thanks for clarifying on covariance.
March 2, 2012 at 5:59 pm
What is the correct answer 7.33% or 2.71% for current +A?
August 7, 2012 at 2:23 pm
@odette123, 7.33% (you can check the answers at the back of the course notes)
March 2, 2012 at 5:53 pm
I had a problem, I know that the best thing to do was to work the question out however just looking at the options. A has a return of 8% and risk of 5% while B provide the same return for a lower risk and also has a positive correlation with Janis current protfolio. Could i have use that to eliminate A immediate/
August 7, 2012 at 2:22 pm
@odette123, No you cannot eliminate A immediately. Because there is positive correlation, it could mean that the total risk ended up higher. The only way you can check for certain is by calculating the total risk for both alternatives.
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