Chapter 4 — Investment Planning

Domain Weight: 17% (~29 questions) Folder: Chapter 4 - Investment Planning/

| File | Topic | Key Concepts | |---|---|---| | 4.1 - Portfolio Theory and Asset Allocation.md | MPT, CAPM, SML, CML, performance measurement, fixed income | Efficient frontier, Sharpe, Treynor, Jensen's alpha, duration, correlation |

Core competencies this chapter builds:

• Apply Modern Portfolio Theory to portfolio construction using correlation and diversification
• Distinguish systematic vs. unsystematic risk and their measurement
• Calculate CAPM expected return and identify mispriced securities using the SML
• Select the correct performance measure (Sharpe vs. Treynor vs. Alpha) based on portfolio characteristics
• Analyze bond price sensitivity using duration and convexity
• Construct an appropriate asset allocation and IPS for a given client profile

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