Portfolio Risk and Return - Part I (2025 Level I CFA® Exam – PM – Module 1)

Master the core of Portfolio Management for the CFA® Level I exam. In this lesson you’ll learn how to calculate and interpret expected return, variance, standard deviation, covariance, correlation, portfolio standard deviation, diversification benefits, efficient frontier, global minimum variance portfolio, the effect of a risk-free asset, Capital Market Line, and investor risk preferences. Includes worked examples and calculator tips to speed you up on exam day.

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Topic 3 – Portfolio Management
Module 1 – Portfolio Risk and Return – Part I
LOS : Describe characteristics of the major asset classes that investors consider in forming portfolios.
LOS : Explain risk aversion and its implications for portfolio selection.
LOS : Explain the selection of an optimal portfolio, given an investor’s utility (or risk aversion) and the capital allocation line.
LOS : Calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data.
LOS : Calculate and interpret portfolio standard deviation.
LOS : Describe the effect on a portfolio’s risk of investing in assets that are less than perfectly correlated.
LOS : Describe and interpret the minimum-variance and efficient frontiers of risky assets and the global minimum-variance portfolio.

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