Why 2021 Is the Time to Add Uncorrelated Returns to Your Portfolio

The key to being a successful investor is understanding how an investment is correlated to the general market performance. You need to have an idea of how it is likely to perform in a bearish and a bullish market.  Covid-19…

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Time To Rethink the Classic 60/40 Portfolio

The Federal Reserve is continuously tightening and affecting fixed-income investments. It has decided to reduce the rate of return for bonds with at least five years of maturity. Generally, the 60/40 portfolio has delivered excellent performance. However, tough times must…

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Writing an Effective Preparation Plan for the CFA® Level III Exam

You’ve invested a lot of hard work, study hours, and your time into passing the level I and level II CFA® exam. You’ve succeeded and now it’s time for the final stage. You can almost see the finish line and…

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CFA® vs. MBA vs. Master’s in Finance (MF): Comparing and Contrasting

If you are just starting or have already begun building a career in finance, you may be considering becoming a CFA (Chartered Financial Analyst®) charterholder.  It’s clearly a respected credential in the investment community. At the same time, you may also…

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7 Reasons People Fail Level I of the CFA® Exam

The financial services industry is filled with career opportunities. There are company-employed financial analysts, CFO’s, and advisors, investment managers, freelance financial planners, personal budget consultants, and, of course, all possible professional careers in the banking and insurance industries. What gets…

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Evolution of Portfolio Theory Efficient Frontier to SML (Calculations for CFA® and FRM® Exams)

Evolution of Portfolio Theory In theory, we could form a portfolio made up of all investable assets, however, this is not practical and we must find a way of filtering the investable universe. A risk-averse investor wants to find the…

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Timelines – Your Best Friends (Calculations for CFA® and FRM® Exams)

What is a timeline? A timeline is an physical illustration of the amount and the timing of cash flows associated with an investment project. Some of the applications of a timeline include: Quantitative Methods: Time Value of Money Capital Budgeting…

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Portfolio Return and Variance (Calculations for CFA® and FRM® Exams)

Portfolio Expected Return Portfolio expected return is the sum of each of the individual asset’s expected return multiplied by its associated weight. Thus: $${E(R_p)}=\sum{w_ir_i}$$ Where: \(i\) = 1, 2, 3, …, n; \(w_i\) = the weight attached to asset i;…

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Beta and CAPM

Beta Beta is a measure of systematic risk, which refers to the risk inherent to the entire financial market. This is the risk that you cannot get rid of by diversifying across different securities. A common misconception is that Beta…

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Demystifying Forward Rate Agreements (Calculations for CFA® and FRM® Exams)

A forward rate agreement (FRA) is a cash-settled over-the-counter (OTC) contract between two counterparties, where the buyer is borrowing (and the seller is lending) a notional sum at a fixed interest rate (the FRA rate) and for a specified period starting at…

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