Portfolio Theory and CAPM
Portfolio Theory and CAPM
(a) Explain the following terms in the context of portfolio theory and the CAPM using diagrams where necessary
- Mean Variance Efficient Portfolio
- Market Efficient Frontier
- Tangent Efficient Portfolio
- Capital Market Line
- Arbitrage Pricing Theory
(b) “The greater number of securities in the portfolio the lower the risk.’ Is the statement true or false? Using a graph explain why?