APMA study plan

Define and compute the key risk and return measures: holding period return, arithmetic vs. geometric mean, variance, standard deviation, covariance, and correlation.

Explain the Markowitz portfolio model: efficient frontier, minimum-variance portfolio, and the effect of correlation on diversification.

Derive the formulas for portfolio expected return and variance for a two-asset portfolio and apply them to numerical examples.

Describe the Capital Asset Pricing Model (CAPM), including the security market line, beta, and the distinction between systematic and unsystematic risk.

Extend portfolio theory to the Capital Market Line and the separation theorem, distinguishing lending and borrowing portfolios.

Calculate and interpret the Sharpe ratio, Treynor ratio, and Jensen's alpha for a portfolio.

Explain the assumptions and implications of the Arbitrage Pricing Theory (APT) and compare it with CAPM.

Apply the concept of diversification to a multi-asset portfolio and compute the number of estimates needed for a covariance matrix.

Identify the components of an investment policy statement (IPS): objectives, constraints, and risk tolerance.

Distinguish between return objectives and risk objectives, and articulate liquidity, time horizon, tax, legal, and unique needs constraints.

Explain the role of the IPS in guiding asset allocation and monitoring performance.

Evaluate a client scenario and draft appropriate IPS objectives and constraints.

Describe the major asset classes (equities, fixed income, real assets, alternatives) and their risk/return characteristics.

Explain strategic vs. tactical asset allocation and the rationale for each.

Apply mean-variance optimization to determine an efficient asset allocation.

Discuss the impact of rebalancing and asset location on after-tax returns.

Compare and contrast active vs. passive investment strategies and their implications for return and risk.

Classify equity investment styles (value, growth, blend; large, mid, small cap) and explain style drift.

Describe fixed-income strategies: duration management, credit selection, and yield curve positioning.

Explain the characteristics and risks of alternative investment strategies (hedge funds, private equity, real estate).

Analyze the role of benchmarks in performance evaluation and the criteria for a valid benchmark.

Explain the sources of active return: asset allocation, security selection, and interaction effects.

Apply style analysis to decompose returns and identify a manager's style.

Evaluate the suitability of a given investment strategy for a client's IPS.

Compute and interpret the time-weighted and money-weighted rates of return.

Calculate and decompose the sources of return using the Brinson attribution model.

Explain the use of risk-adjusted performance measures (Sharpe, Treynor, information ratio) in manager evaluation.

Identify and discuss common biases and errors in performance measurement.

Synthesize concepts from all domains by solving integrated case studies.

Review and reinforce weak areas identified from previous weeks' practice.

Practice time management by completing a full-length mock exam under timed conditions.

Analyze mock exam results to identify remaining knowledge gaps and create a final review checklist.