CM2 Portfolio Theory Class 1 | CA Praveen Patwari Sir | IFoA | IAI
Channel: Actuators Educational Institute
Date: 2023-12-08

In this session, we explore the key principles and applications of the CM2 framework, designed to optimize investment portfolios in an ever-changing market landscape. You’ll learn about the foundational concepts of CM2 Portfolio Theory, how to construct and manage a diversified portfolio, and techniques for risk assessment and mitigation. This lecture will equip you with valuable knowledge and actionable insights. Join us as we demystify the complexities of portfolio theory and help you make informed investment decisions! Don’t forget to like, subscribe, and hit the notification bell for more insightful content!

Timestamp
1:00 Introduction
3:21 Active VS Passive Investing
5:22 Importance of Negatively-correlated or Uncorrelated Stocks for a Successful Portfolio
12:35 Understanding Efficient & Inefficient Portfolios
18:35 Understanding 'Mean Variance Portfolio Theory'
19:00 What is an Opportunity Set?
19:45 Few Assumptions of the Portfolio Theory
23:13 Calculations Required for a Portfolio with 'n' Assets
26:32 Portfolio Return & Variance- Formulas & Sums
48:00 Global Minimum Variance- Formula & Derivation
52:45 Graph of an Opportunity Set
56:15 Efficient Frontier, Inefficient Portfolio & Unattainable Point
58:15 Adding a Risk-free Asset to a Risky Portfolio
1:03:40 Mathematical Proof of a Straight Line Efficient Frontier, with 2 Assets, and Rho=1
1:15:25 Lagrangian Function
1:21:22 Sum on Lagrangian Function
1:46:35 Benefits of Diversification
1:59:40 Indifference Curves
2:07:07 Models of Asset Returns
2:14:05 Systematic Factors & Systematic Return
2:15:15 Specific Return
2:17:15 Illustration- Two Factor Model
2:21:50 Multifactor Models
2:27:00 Process of Constructing Uncorrelated Factors
2:34:55 Illustration- Construction of Uncorrelated Factors

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