• What do we mean by risk aversion, and what evidence indicates that investors are generally risk averse?
• What are the basic assumptions behind the Markowitz portfolio theory?
• What do we mean by risk, and what are some measures of risk used in investments?
• How do we compute the expected rate of return for a portfolio of assets?
• How do we compute the standard deviation of rates of return for an individual risky asset?
• What do we mean by the covariance between rates of return, and how is it computed?