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Lesson 7 Capital Asset Pricing Model and Modern Porfolio Theory PDF

10 Pages·2019·English
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by ['man ibe']| 2019| 10 pages| English

About Lesson 7 Capital Asset Pricing Model and Modern Porfolio Theory

The document discusses the Capital Asset Pricing Model (CAPM) and modern portfolio theory. It defines CAPM as a model that relates systematic risk and expected return. CAPM accounts for two types of risk: systematic/undiversifiable risk that affects the overall market and unsystematic/diversifiable risk that is specific to individual assets. The CAPM formula shows that expected return equals the risk-free rate plus a risk premium that is proportional to the asset's systematic risk (beta). Beta measures how an asset's returns correlate with the overall market.

Detailed Information

Author:['man ibe']
Publication Year:2019
Pages:10
Language:English
Format:PDF
Price:FREE
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