Content, progress and pedagogy of the module

This module introduces students to a practical application of modern portfolio theory and its implications for the pricing of assets, the process of constructing, managing, and evaluating a portfolio. This module enhances the student’s capacity for a career in investment and portfolio management and is recommended for students wishing to pursue further studies in Finance, such as the Master in Finance.

The module is practically oriented and will explain how to perform simulations in portfolio construction and asset allocation strategies with the use of real data. The students will learn how to apply investment strategies for the traditional asset classes (stocks and bonds) using excel tools and will be able to work with financial data through open data and software solutions.

Learning objectives

Knowledge

The objective is that the student after the module possesses the necessary knowledge on:

• understanding the principles of modern portfolio theory and the effect of diversification on investment portfolios.
• understanding the theoretical background of optimisation and how it can be applied to solve practical investment problems.
• computing historical and expected returns, understanding risk measures and the importance of the risk-return relationship.

Skills

The objective is that the student after the module possesses the necessary skills in:

• understanding of the key elements of the portfolio management process, including the investment setting, investment policy, and asset allocation.
• applying the capital market theory effect on expected returns and possible risk-return combinations when a risk-free asset is combined with a portfolio of risky assets.
• developing standard investment strategies in excel with the use of relevant information technology.

Competences

The objective is that the student after the module possesses the necessary competences in:

• defining the objectives in constructing and managing a portfolio and learning to create an investment policy statement.
• measuring and evaluating portfolio performance using alternative risk-adjusted performance measures.
• understanding the concept of diversification and the importance and application of the concept for portfolio construction and performance.

Type of instruction

For information see § 17.

Exam

Exams