CMFAS Module 6 – Securities Products and Analysis

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CMFAS Module 6 – Securities Products and Analysis

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

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