#### Learning Outcome Statements

My Note:

1. Capital Market Theory *a. describe the implications of combining a risk-free asset with a portfolio of risky assets;*
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b. explain the capital allocation line (CAL) and the capital market line (CML);*
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2. Pricing of Risk and Computation of Expected Return *c. explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk;*
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d. explain return generating models (including the market model) and their uses;*
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e. calculate and interpret beta;*
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3. The Capital Asset Pricing Model *f. explain the capital asset pricing model (CAPM), including its assumptions, and the security market line (SML);*
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g. calculate and interpret the expected return of an asset using the CAPM;*
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4. Applications of the CAPM *h. describe and demonstrate applications of the CAPM and the SML.*
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