CFA Level 1 Full Course: Portfolio Mathematics

[@mstoynov]

Get my question-based revision and support me at www.stoynov.co.uk.

[@Sanchayxm]

amazing video Martin! the explaination was very crisp and helpful.

[@mstoynov]

I'm glad it helped!

[@aqibbbbb]

was waiting for this one, right on time!

[@mstoynov]

Great!

[@martincontreras6031]

Martín! Thank you so much 🎉🎉🎉

[@mstoynov]

Thanks for watching!

[@HariHaran-pg9zt]

Hi Martin, Is it necessary to find the negative value of N (-Z) for Shortfall risk or we can conlude that the value given in the normal distribution table ( for example in your question SFR B= 0.78 and for that value in the table was .7823 or 78.2% is this the final answer or 21.8% is the final answer for Shortfall risk) I am clear with the concept but confused whether to take this or that.... Please help me with this.

[@mstoynov]

21.8 is the final answer because you are estimating the probability in the left tail meaning the probability of failing to achieve the minimum acceptable return.

[@HariHaran-pg9zt]

Thankyou Martin.....

[@shamsindeenodulalu8342]

Hi Martin! Thanks for the video so far. I so much appreciate your effort in making understanding of this so seamless. Just to confirm, the formula for Co variance while we doing the statistical measure of assets, is different from the co variance formula here. Is the any reason for that? Thank you.

[@mstoynov]

Thank you for your feedback. There are two versions of the formula. In this reading, we are looking at covariance given a joint probability matrix. The regular formula elsewhere assumes equal probabilities for all observations.

[@martijntjeeh]

Question at 21:33, covariance of -11.85: shouldn't we divide it by something? n-1?

[@mstoynov]

Not when we are dealing with probabilities.

[@martijntjeeh]

Clear, thanks for the quick response!

[@vaid_hehe]

For the portfolio variance formula, the raised to 0.5 is not really mentioned in the curriculum

[@mstoynov]

Raised to 0.5 is the same as a square root and we use it to work out standard deviation from variance.

[@vaid_hehe]

@@mstoynov thanks!