exam2 study guide - FINAN520 Exam2 study guide You can...

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FINAN520 Exam2 study guide You can bring a 4X6 one page formula sheet for the exams. Chapter 6: Understand the concept of diversification and why it can reduce portfolio risk Understand the concept of covariance and correlation coefficient Know how to calculate covariance and correlation coefficient Know how to calculate the expected return and standard deviation of two risky asset portfolios Understand investment opportunity set Understand the mean-variance criterion Know how to calculate the composition, expected return and standard deviation of the minimum-variance portfolio with two-risky assets Understand how correlation may affect the diversification effect and the investment opportunity set Know how to calculate the composition, expected return and standard deviation of the complete portfolio with two two-risky assets and a risk-free asset Understand what is efficient frontier Understand the separation property Chapter 7 know how to use the CAPM formula to calculate expected returns, beta, risk free rate, and market return understand the assumptions of CAPM understand the four conclusions/implications of CAPM and know how to apply them understand the capital market line (CML) and security market line (SML) and their difference from capital allocation line (CAL) understand the concept of beta and how it differs from standard deviation of a security understand what alpha is and how to calculate it o what is an underpriced stock and where is it in the SML figure o what is un overpriced stock and where is it in the SML figure
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This note was uploaded on 03/29/2012 for the course ECON 101 taught by Professor Schneider during the Spring '11 term at Kansas State University.

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exam2 study guide - FINAN520 Exam2 study guide You can...

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