Explaining the Capital Asset Pricing Model (CAPM) & Security Market Line (SML)

In this video, Ryan O'Connell, CFA, FRM, provides an in-depth explanation of the Capital Asset Pricing Model (CAPM) and the Security Market Line (SML). Learn how to calculate the expected return of a security (E(r)), understand the risk-free rate (R(f)), and explore the concept of Beta (B) and systematic risk. Ryan breaks down the CAPM formula and demonstrates how to determine if a stock is overvalued or undervalued in finance. By the end of this video, you will have a comprehensive understanding of the CAPM explained and the significance of the SML in investment analysis. Perfect for finance professionals and students alike, this video covers all essential aspects of the Capital Asset Pricing Model explained.

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Chapters
0:00 - Introduction to the Capital Asset Pricing Model (CAPM)
0:16 - Expected Return of a Security (E(r))
0:40 - Explanation of the Risk-Free Rate (R(f))
1:26 - Understanding Beta (B) and Systematic Risk
2:33 - Expected Return on the Market (R(M))
3:19 - Explanation of the CAPM Formula
4:51 - Understanding the Security Market Line (SML)
6:28 - Determining if a Stock is Overvalued or Undervalued

*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

[RyanOConnellCFA]

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[karave_]

Very good video, simple and clear. Thank's!

[konstantinosl]

A whole book chapter in 8 minutes. Thank you very much

[ron]

Great explanation of a very important model!

[rithikprasad]

Thanks for the lessons, Ryan. Would love to see video of CAPM in Python.

[nafeesjadoon_]

is there any video on ZCAPM BY kolari, that is such a groundbreaking work for outdating the multifactor CAPM models. but i can't find video on that. plz do a video on that... THANKS

[Mongoose]

A bit of an abrupt finale. Yet, another good explanation of financial terms.

[kashvigandhi]

Can you please make the videos on numerical of CFA