Chapter 2 Modern portfolio theory

1. Diversification

2. The market portfolio

3. The capital asset pricing model

3.1. Systematic and unsystematic risk

3.2. risk free + beta (return on market - risk free)

4. Efficient markets hypothesis

4.1. Weak form

4.2. Semi-strong form

4.3. Strong form

5. Statistical measurement

5.1. Alpha

5.2. Sharpe ratio

5.3. R-squared

5.4. Beta

6. History

7. Efficient financial markets

8. Portfolio variance

9. Optimum portfolios

10. Portfolio theory formulae

10.1. Perfect positive correlation

10.2. Perfect negative correlation

10.3. Imperfect correlation

11. Graphs

11.1. The efficient frontier

11.2. Indifference Curves

11.3. Risk free Investments