Hi I am new member. I went through the material provided by GARP for Foundation of Risk mgmt. - chapter 1 but could not correlate it with the video on the same topic. I could not see much maths involved in first 2 chapters whereas the video shows the quantitative side(which makes sense). Is it a good idea to first go thru the video then the material as provided by GARP ? Pls Advice. Regards Shubhajit

Hi Shubhajit, I like the idea of going though the video first to know what i am learning in a new chapter and once the video finishes, then you could read the garp core reading, BT notes, practice questions. Video is a concise and quick way to cover topics initially. Hope this helps. Ankur

Hi Shibhajit, I would highly recommend the videos by David. We most definitely get positive feedback on those as David reviews every individual AIM. Do you need the readings? See here: http://www.bionicturtle.com/faqs/category/frm-product#do-i-need-the-handbook-and-readings You might find Aleksander 's input helpful here: http://www.bionicturtle.com/forum/posts/18263/ Should you have any additional questions or concerns, please do not hesitate to ask. Good luck! Thanks, Suzanne

Hi Dave, Reference: P1.T1 Amenc-Chapter 4 (questions 26 to 32) My question is on 31.4 D. This is my understanding on Jensen's alpha --. Excess return (9%) less CAPM. CAPM: Risk Free plus ((exp return from market less risk free return) * beta)) Risk free is 3.0 % exp return from mkt is 5% and beta is 0.8 . In the answers why is that 0.8 is multiplied by 5%? I do not see the CAPM equation here. Am I missing something here?

Hi thanala, An "excess return" refers to excess over this riskfree; Grinold always uses excess returns, other do not. Best is to be comfortable with both. This question (31.4) asks, emphasis mine, "Assume the riskfree rate is 3.0% and the price of risk (excess market return) is 5.0%. A manager's portfolio produces a return of 9.0% with 30% volatility and a CAPM beta of 0.8 (i.e., quantity of risk = 0.8). What is the (ex post or realized) Sharpe ratio?" (actual question below @ http://www.bionicturtle.com/forum/threads/l1-t1-31-sharpe-treynor-jensens.3460/) The means the market's return = 8% or, equivalently, the market's excess return (aka, price of risk) = 8 - 3% = 5%. So that: Expected portfolio return per CAPM, if beta = 0.8 is given by: Rf + beta(E[M] - Rf) = 3% + 0.8*5% = 7% Jensen's alpha = Portfolio - E[per CAPM] = 9% - 7% = 2% The answer given is doing this (is using CAPM), Answer given is 9% - (0.8 *5%) - 3% = 2% i.e., 9% portfolio - [Rf + beta*ERP]; ERP = equity risk premium or excess market return But we can also just deal in "excess returns," which turns out to be convenient in multi-factor models: if portfolio excess returns = 6%, then alpha = 6% - (beta*ERP) = 6% - (0.8*5%) = 2%. I hope that explains, thanks