Investors are rational and seek to maximize their expected utility functions
Investment is for one-period only
Figure 18.2 Efficient Frontier and Utility Curves for Investors A and B
Figure 18.3 Combinations of the Risk-Free Asset RF and Risky Portfolios P1 and P2
Figure 18.4 Combinations of the Risk-Free Asset RF and the Risky Portfolio M
CAPM derivation
Security risk and return
Reward for investing in a security Security risk Securitys reward-to-risk ratio Risk/return relationship The security market line (SML)
Estimating Beta
Security characteristic line
Information service beta estimates
Calculating beta: Separating systematic risk from diversifiable risk. Differences between the SML and the security characteristic line
Contemporary Investments: Chapter 18