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Learn the Benefits of a Diversified Portfolio With This E-Learning Course on Portfolio Theory

Posted on: Tuesday, 8 November 2005, 12:00 CST

Research and Markets (http://www.researchandmarkets.com/reports/c27410) has announced the addition of E-Learning Course: Portfolio Theory to their offering.

This course looks at 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.

In this course, you will explore:

-- 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

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

-- registered representatives

Topics covered include:

1. Market Efficiency - The Concept

-- 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. The 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.

2. Market Efficiency - The Evidence

-- Mindful of the contentious nature of the theory of market efficiency, this tutorial 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. It also provides different examples of market inefficiencies and explains the findings of studies supporting their presence.

3. Portfolio Theory - The Markowitz Model

-- This tutorial 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 tutorial 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.

4. Portfolio Theory - Single-Index & Multi-Index Models

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

5. Portfolio Theory - The Capital Asset Pricing Model (CAPM)

-- 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 tutorial describes in detail the theory of CAPM and looks at some of the empirical evidence of the validity of the model.

6. Portfolio Theory - Arbitrage Pricing Theory (APT)

-- This tutorial 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 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 tutorial describes how the arbitrage process works and examines the merits of APT as a capital asset pricing model.

7. Portfolio Theory - Performance Measurement Models

-- Beginning with the Sharpe ratio, which is the seminal work in the area of portfolio performance, this tutorial 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.

For more information visit http://www.researchandmarkets.com/reports/c27410.

Source: Business Wire

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