Investment Analysis and Portfolio Management Notes
Subject Overview
The first Finance group elective, covering investment fundamentals and primary/
Subject at a glance
4
Units
31
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Investment concepts
- objectives and alternatives
- risk and return measurement
- primary market design and SEBI guidelines
- secondary market participants
- trading and settlement
- stop loss
- margin trading
- short selling
- insider trading
Holding period return
(P1 − P0 + D) / P0
Expected return
Σ pi Ri
Standard deviation
√[Σ pi (Ri − E(R))²]
Beta
Cov(Ri, Rm) / Var(Rm)
Study guide
This unit covers investment objectives, alternatives, risk and return, primary market design and SEBI guidelines, secondary market, trading, settlement, stop loss, margin trading, short selling and insider trading. Understand how an IPO and a trade settle.
- Intrinsic value concept
- economic/industry/company analysis (E-I-C and C-I-E approaches)
- Dow theory
- bull and bear trends
- chart types
- trend lines
- support and resistance
- trading volume
- moving averages
Studies
Economy, industry, company
Price and volume history
Goal
Intrinsic value
Timing and trends
Tools
Ratios, cash flows, DCF
Charts, moving averages, support and resistance
Horizon
Long term
Short to medium term
Study guide
You study intrinsic value, EIC and CIE analysis, Dow theory, trends, charts, support and resistance, volume and moving averages. Practise reading a price chart with a moving average.
- Meaning
- importance and approaches
- portfolio analysis
- evaluation and revision techniques
- 1
Set objectives and constraints
Return, risk, liquidity
- 2
Asset allocation
- 3
Security selection
- 4
Construct the portfolio
- 5
Monitor and revise
- 6
Evaluate performance
Sharpe, Treynor, Jensen
Study guide
You study portfolio management approaches, analysis, evaluation and revision. Build and review a small paper portfolio.
- Markowitz Model
- Capital Asset Pricing Model
- single-index model
- Arbitrage Pricing Theory
- market efficiency and behavioural finance
- derivative instruments
- forward vs futures contracts
- option contract types and payoff computation
CAPM
E(R) = Rf + β (Rm − Rf)
Single-index model
Ri = αi + βi Rm + ei
Call payoff (buyer)
max(S − K, 0) − premium
Put payoff (buyer)
max(K − S, 0) − premium
Study guide
You study Markowitz, CAPM, single-index, APT, market efficiency, behavioural finance, derivatives, forwards versus futures and options payoffs. Draw payoff diagrams for call and put options.
Why Investment Analysis and Portfolio Management Matters
Investment analysis supports careers in equity research, wealth management and fund management, and prepares for NISM and CFA study.
How to Prepare for Investment Analysis and Portfolio Management
- Follow a stock and analyse it fundamentally and technically.
- Practise CAPM and portfolio return numericals.
- Draw option payoffs.
Investment Analysis and Portfolio Management: Frequently Asked Questions
What is the difference between a forward and a future?
A forward is a customised over-the-counter contract, while a future is a standardised contract traded on an exchange with daily settlement.