Page 49 - FINAL CFA SLIDES DECEMBER 2018 DAY 3
P. 49
Session Unit 2:
9. Probability Concepts
LOS 9.l:
Calculate and interpret the EV, Variance, and SD of a random variable and of returns on a portfolio, p.186.
The EV and variance for a portfolio of assets can be determined using the properties of the
individual assets in the portfolio. You need portfolio weight for each asset.
The Portfolio EV composed of n assets with weights, wi, and EVs, Ri, can be determined as:
Portfolio variance. The variance of the portfolio return uses the portfolio weights also,
but in a more complicated way:
2 Asset portfolio, p.186:
3 Asset portfolio, p187
Only 2 for CFA Level 1 Exams!
