How to solve CAPM theory questions (e.g., slopes of SML, CAL & CML)

In this video, we dive deep into the Capital Asset Pricing Model (CAPM) and explore the slopes of the Security Market Line (SML), Capital Market Line (CML), and Capital Allocation Line (CAL). You'll learn how these slopes relate to the market risk premium, the Sharpe ratio, and beta, with clear explanations and proofs. Whether you're preparing for an introduction to corporate finance or looking to strengthen your understanding, this video will provide valuable insights into key CAPM concepts.

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Explaining the security market line (SML)

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How to solve CAPM theory questions on graphs