Portfolio theory studies how financial assets can be combined to give an optimal level of return, given the risk. The course gives a basic insight into portfolio management, which is relevant for banks, insurance companies and pension funds, for example. The course covers both theoretical pricing models for financial assets (CAPM, APT) and methods for evaluating the results of portfolio management.

The course covers the following areas: Efficient portfolios, Markowitz prescriptions, Diversification, Capital asset pricing model (CAPM), Arbitrage pricing theory (APT), Security analysis.

Intended Learning Outcomes
Intended Learning Outcomes

The overall aim of the course is to enable students to understand the game of returns and risk in portfolio theory, and to facilitate the application of standardized portfolio selection techniques in real-life while guiding them in critical-thinking with regard to recent advances in portfolio selection process.

Upon completion of the course, students should be able to:

Knowledge and understanding

1. Explain the basic connections between risk and returns in financial markets.

Skills and abilities

2. Prove and apply several evaluation models and standard portfolio selection techniques.

Judgement and approach

3. Construct and evaluate their own stock portfolios and moreover, put the implications of the theoretical models in contrast to empirical results.