Teaching CAPM for a Pre-Finance Graduate Program at the STEM Undergraduate Level: Linear Algebra Perspective

نویسندگان

چکیده

Students considering a masters in Finance Engineering or Artificial Intelligence are usually required to have an undergraduate background science, technology, engineering, mathematics (STEM). STEM students good capacity and but they may not studied financial theory. To facilitate the classroom teaching of Capital Asset Pricing Model (CAPM) for students, this paper seeks expound on essence theory starting at two-asset framework. Adopting concepts proposed by Merton (1972), accomplishes derivation virtue basic mathematical tools such as linear algebra, geometry, statistics except calculus. We show that major aspects Merton’s CAPM universe N assets also be obtained world. Through methods article, will learn in-depth its hands-on empirical tool. For example, realize even if investors specify different threshold rewards, their CAPMs yield identical pricing portfolios.

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ژورنال

عنوان ژورنال: Mathematics

سال: 2021

ISSN: ['2227-7390']

DOI: https://doi.org/10.3390/math9141668