If you are looking for a high-quality, free investments course online, you are in the right place. The purpose of this course is to give you a strong background in fundamental topics in investing. We believe that this course would be useful for both beginner and seasoned investors as well as students studying finance as part of their undergraduate or postgraduate degrees.
- Fundamental concepts in investing.
- Portfolio theory and practice.
- Equilibrium in financial markets.
- Capital asset pricing model.
This investments course begins by introducing fundamental concepts in investing. These include concepts such as the holding period return, arithmetic average return, geometric average return, etc. Then, we move on to the portfolio theory. In particular, we explain how to calculate portfolio return and risk. Afterward, we discuss how to form efficient portfolios. The final part of the course deals with the concept of market equilibrium. This is where we introduce asset pricing models such as the capital asset pricing model (CAPM) and the arbitrage pricing theory (APT).
- Return calculations in 3 easy steps: We begin the course by teaching the basics of return calculations, covering concepts such as gross return, net return, and more.
- Real return vs nominal return: When making return calculations, it is important to take the rate of inflation into account as it creates a wedge between nominal returns and real returns.
- Holding period return: Investors often hold assets over a number of months/years. We teach how to make holding period return (HPR) calculations.
- Arithmetic average return: This is arguable the simplest investment statistic for assessing investment performance across multiple periods.
- Geometric average return: We explain the formula for this popular metric of investment performance and offer a calculator as well.
- Return volatility: It is important for investors to take into account risk as well as return when making investment decisions. Return volatility is a popular risk measure that captures how volatile an asset’s returns are.
- Expected return: We introduce expected return as a forward-looking measure of investment performance, explain its formula, and provide a convenient calculator.
- The risk-free rate of return: We explain the concept of a risk-free asset and why yields on government securities are often used as estimates of the risk-free rate.
- Risk appetite: We offer a definition of risk appetite and distinguish it from risk capacity and risk tolerance.
- Fair game: We discuss what a fair game means in an economic context and link it to the concept of risk appetite.
- The opposite of risk-averse?: Most people have a dislike for risk under most circumstances, leading to risk-averse behavior. In this lesson, we introduce different risk attitudes, with a particular focus on risk-seeking behavior.
- Risk aversion coefficient: We introduce concepts such as absolute risk aversion and relative risk aversion.
- Risk premium: Given that we dislike risk in most circumstances, we shy away from bearing risk unless there is sufficient compensation in place, which is captured by the risk premium.
- Portfolio return – Calculator and formula.
- Portfolio risk – Calculator and formula.
- Mean-variance optimization – According to modern portfolio theory, investors worry about the mean and variance of potential returns when making investment decisions.
- Efficient frontier – This is the set of efficient portfolios within a market.
- Optimal risky portfolio – How to locate it?
- Market portfolio – Key characteristics and practical relevance.
- Systematic risk and idiosyncratic risk: We explain how “total risk” can be decomposed into “systematic risk” and “idiosyncratic risk”, where the latter can be eliminated through diversification.
- Capital asset pricing model – Security market line.
- Arbitrage pricing theory – APT formula, relation to the CAPM, and factor models.
- Jensen’s alpha – Calculator, formula, and examples.
- Sharpe ratio – Calculator, formula, and examples.
- Treynor ratio – Calculator, formula, and examples.
- Investments quiz – Test your learning of the material taught in this course.
If you are a total beginner to investing, we suggest you begin with the first lesson: basic return calculations. If you are comfortable performing simple return calculations, you can head straight to return volatility or expected return where we discuss investment risk and return in more detail. Or, if you are comfortable with investment basics, you can start from portfolio return where we begin to cover modern portfolio theory.
Check out our other free courses and tutorials
We also offer a course on trading basics. It introduces the fundamental concepts beginner traders need to be familiar with. If you are interested in digital tokens in general or cryptocurrencies in particular, we provide a course on tokenomics as well. This course is for beginners and covers topics ranging from nun-fungible tokens to cryptocurrency exchanges. Finally, you can check out our tutorial on analyzing stock returns. Within this tutorial, we provide step-by-step guides on topics such as plotting time series or histograms of stock returns.