Chapter 15: Portfolio and Market Analysis

Chapter summary

Chapter 15 covers portfolio construction and market analysis. Diversification eliminates unsystematic risk; systematic risk remains. Correlation determines how well assets offset each other — a correlation of −1 maximizes diversification benefit. Standard deviation measures total risk; beta measures market risk only. The Sharpe ratio measures risk-adjusted return. Technical analysis studies price and volume patterns; fundamental analysis evaluates financial statements and intrinsic value.

Key concepts

• Suitability and a Customer’s Financial Objectives
• Asset Allocation
• Forms of Analysis
• Information Sources for Municipal Bond Market Participants
• Technical Analysis
• Suitability and a Customer’s Financial Objectives
• Asset Allocation
• Forms of Analysis
• Information Sources for Municipal Bond Market Participants
• Technical Analysis
• Apply the suitability framework: tax bracket, time horizon, liquidity...
• Match product types to objectives: growth (equities), income (bonds,...

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