CAPM & Security Market Line Interactive

Examination of equilibrium models that determine the required rate of return for risky assets. CAPM & Security Market Line Interactive turns that idea into something you can manipulate directly and watch respond.

Examination of equilibrium models that determine the required rate of return for risky assets. It focuses on Capital Asset Pricing Model (CAPM), Beta (β), Security Market Line (SML), Arbitrage Pricing Theory (APT), Systematic vs. Idiosyncratic Risk from the “Asset Pricing Models: CAPM and APT” section.

The “Risk-Free Rate (R f) 2%”, “Market Return (E[R m ]) 8%”, “Asset Beta (β i) 1.2” sliders change the key inputs. Every change updates the visualization in real time, so you can see exactly how each variable affects the outcome.

Finance Theory I provides a rigorous introduction to the fundamental principles of modern financial economics and investment management. The course focuses on the valuation of financial assets, the relationship between… This demo is the interactive piece for the “Asset Pricing Models: CAPM and APT” section. Open the full Finance Theory I course wiki at https://www.getlykke.com/explore/public/finance-theory-i-5c23d6da-c239-4628-9b1d-fb3539a0c893 for notes, flashcards, quizzes and the other demos.

You'll build intuition for Capital Asset Pricing Model (CAPM), Beta (β), Security Market Line (SML), Arbitrage Pricing Theory (APT), Systematic vs. Idiosyncratic Risk — and, crucially, see how they behave when you change the inputs, which is hard to get from a textbook or lecture on Finance Theory I alone.