Corner Portfolios still relevant or not?

CFA Level III Portfolio Management
#1

It’s not covered in Schweser readings but there seem to be questions included in cfa practice tests or not? Is it covered in the curriculum?

#2

Its not covered to the extent it was in previous years. It is mentioned VERY briefly; however consensus on the forum is to know the concept, just in case. Especially since there is a blue box which covers it somewhat.

#3

Thanks!

#4

Once.

In a footnote.

There is _ no _ consensus: I, for one, disagree.

There may be a majority opinion, but that’s not a consensus.

#5

Corner portfolios are easy to understand and relevant. There’s a question in one the past CFAI mocks, and according to IFT it’s still relevant.

#6

Agree, they’re free points!

  1. Pick the 2 corner portfolios that are within the desired return or risk target.

  2. Calculate weights, simple linear math problem.

  3. If leverage is allowed, pick the corner portfolio with the highest Sharpe ratio, and repeat step 2.

That’s all I’ve seen in the 2010-2017 mocks I’ve done so far.

#7

@1. Take the two portfolios that have the highest Sharpe ratio and are each below and above expected return

#8

That is per definition the case because the corner portfolios lie on the efficient frontier.

#9

Yeah but it is not what you have specified in your otherwise helpful list above…