The Mutual Fund Theorem and Covariance Pricing Theorems - Financial Theory

Explore a comprehensive lecture on financial theory that delves into the Capital Asset Pricing Model, focusing on two key results: the Mutual Fund Theorem and the Covariance Pricing Theorem. Learn how the Mutual Fund Theorem, developed by Tobin, defines optimal diversification and led to the growth of mutual funds. Discover why the riskiness of an asset is measured by its covariance with the market rather than its variance. Examine the mathematical derivations of these concepts, understand the significance of the Sharpe ratio, and explore how asset prices depend on covariance rather than variance. This 1-hour 16-minute lecture from Yale University's Financial Theory course provides valuable insights for anyone interested in advanced financial concepts and portfolio management.

- Chapter 1. The Mutual Fund Theorem
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- Chapter 2. Covariance Pricing Theorem and Diversification
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- Chapter 3. Deriving Elements of the Capital Asset Pricing Model
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- Chapter 4. Mutual Fund Theorem in Math and Its Significance
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- Chapter 5. The Sharpe Ratio and Independent Risks
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- Chapter 6. Price Dependence on Covariance, Not Variance
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