Summary of Updates
(Dec 2015 – Version 2.3)
The updates made to the CMFAS Module 6 (Nov 2015 – Version 2.2) are summarized as follows:
*Additions / updates / corrections are indicated in blue italics.
Deletions are indicated in strikethrough.
Chapter Page
No.
6 – Portfolio Management
Update / Amendment
Section 6.3.6 –
The Capital
Asset Pricing
Model
Pg 80 The CAPM relates the expected rate of return for any security or portfolio with the relevant risk measure as follows:
E
(
R i
) = Risk-free Rate + Risk Premium = R f
+ β i
+
[
E
(
R m
) - R f
]
E (R i
) = Risk-free Rate + Risk Premium = R f
+ β i
(R m
- R f
) where
E (R i
) = expected return on security or portfolio
R f
= risk-free rate
R m
= expected return of overall market
β i
= volatility of asset or portfolio relative to that of the market
The difference between R m and R f is also known as the equity risk premium
7 – Equity Securities
Section 7.3 –
Types of
Ordinary
Shares
Section 7.13 –
Summary
Pg 99 Hard Asset Shares - These are shares of companies that own valuable assets. Often, such valuable assets are in the form of property or investments that have appreciated in value. Investors normally show strong interest in these shares when their share prices trade below their net asset values.
Pg 125 4.
Ordinary share can be classified as blue chip shares, growth shares, income shares, cyclical shares, defensive shares, hard asset shares and foreign shares.
Appendix B – Formulae Sheet
Capital Asset
Pricing Model
Pg 202 (ii) E
(
R i
)
= Risk-free Rate + Risk Premium
= R f
+ β i
+
[
E
(
R m
)
- R f
]
R f
+ β i
(R m
– R f
) where E(R i
) = expected return on security or portfolio
R f
= risk-free rate
R m
= expected return of overall market
β i
= volatility of asset or portfolio relative to that of the market
The difference between R m and R f is also known as the equity risk premium