Explain why the fact that the "new" efficient frontier as defined by the capital market line (CML) dominates the "old" efficient frontier produced by N risky assets alters one's perception of the appropriate portfolio for an investor to hold.

Explain the roles of beta and the coefficient of determination in defining the risk of a particular security as part of the capital asset pricing model (CAPM).

Describe why an understanding of modern portfolio theory (MPT) and its legal implications for a practitioner are important for today's financial planner.

Compute a holding period return, a per-period return, an arithmetic mean return, and a geometric mean return.

Compute an expected rate of return and an effective annual rate of return.

Describe the sources of risk and the most common methods of dealing with each source.

Describe various measures of risk, and compute the variance and standard deviation for a set of ex post returns

Describe what is meant by a normal, a lognormal, and a skewed distribution, and identify the forms of kurtosis.

Explain how a Monte Carlo simulation is performed, and understand its implications in considering an investment strategy.

Compute the buying power of a margin account, its equity value, the value at which a margin call will be made, the amount of cash that must be added when a margin call is made, and the amount of additional cash that can be withdrawn from a margin account.