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Capital Asset Pricing Model: Efficient Portfolios and Market Equilibrium
This lecture covers the Capital Asset Pricing Model (CAPM), systematic risk, application of CAPM, leverage in CAPM, and the properties of mean-variance-efficient (MVE) portfolios. It explains the distinction between minimum-variance and mean-variance-efficient portfolios, two-fund separation, and the mathematical characterization of the general case. The Security Market Line (SML) and the Capital Market Line (CML) are discussed, along with the Security Characteristic Line (SCL). The lecture also delves into the equilibrium market clearing, the market portfolio, and the quiz on beta values of various stocks and assets.