April 2019
Intermediate to advanced
426 pages
11h 13m
English
Content preview from Mastering Python for Finance - Second Edition
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The Capital Asset Pricing Model and the security market line
A lot of the financial literature devotes exclusive discussions to the Capital Asset Pricing Model (CAPM). In this section, we will explore key concepts that highlight the importance of linearity in finance.
In the famous CAPM, the relationship between risk and rates of return in a security is described as follows:
For a security, i, its returns are defined as Ri and its beta as βi. The CAPM defines the return of the security as the sum of the risk-free rate, Rf, and the multiplication of its beta with the risk premium. The risk premium can be thought of as the market portfolio's ...
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.