Capital Asset Pricing Model: Risk-Return Trade-off Theory

This lecture covers the Capital Asset Pricing Model (CAPM) and the risk-return trade-off theory in financial economics. It explains the mean-variance utility, the market portfolio, equilibrium market clearing, the Capital Market Line, the Security Market Line, and the Security Characteristic Line. The lecture also discusses the efficient frontier, risk premiums, systematic and idiosyncratic risks, and the relationship between risk and return in investment portfolios.