Practice Question Set: Modern Portfolio Theory (MPT) and the Capital Asset Pricing Model (CAPM)

Topic Progress:

Chapter 5. Modern Portfolio Theory (MPT) and the Capital Asset Pricing Model (CAPM) Practice Question Set contains 48 pages covering the following learning objectives:

* Explain modern portfolio theory and interpret the Markowitz efficient frontier.

* Understand the derivation and components of the CAPM.

* Describe the assumptions underlying the CAPM.

* Interpret the capital market line.

* Apply the CAPM in calculating the expected return on an asset.

* Interpret beta and calculate the beta of a single asset or portfolio.

* Calculate, compare, and interpret the following performance measures: the Sharpe performance index, the Treynor performance index, the Jensen performance index, the tracking error, information ratio, and Sortino ratio.

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