Portfolio Diversification and Supporting Financial Institutions - Lecture 4

Explore the foundations of modern financial theory in this 78-minute lecture from Yale University's Financial Markets course. Delve into mean-variance portfolio analysis and the Capital Asset Pricing Model (CAPM) as presented by Professor Shiller. Begin with the history of the first publicly traded company and trace the evolution of stock markets worldwide. Examine the equity premium puzzle and learn about Harry Markowitz's pioneering work in portfolio analysis. Understand concepts such as leverage, risk-return trade-offs, efficient portfolio frontiers, and the Mutual Fund Theorem. Conclude with an in-depth look at the CAPM and its emphasis on market risk as a determinant of stock returns. Gain valuable insights into portfolio diversification and the role of financial institutions in supporting market efficiency.

- Chapter 1. Introduction.
- Chapter 2. United East India Company and Amsterdam Stock Exchange .
- Chapter 3. The Equity Premium Puzzle .
- Chapter 4. Harry Markowitz and the Origins of Portfolio Analysis.
- Chapter 5. Leverage and the Trade-Off between Risk and Return.
- Chapter 6. Efficient Portfolio Frontiers .
- Chapter 7. Tangency Portfolio and Mutual Fund Theorem.
- Chapter 8. Capital Asset Pricing Model (CAPM) .