CAPM and portfolio theory

CAPM and portfolio theory

Bachelor of Business Studies (BBS) — Fourth Year

Subject: Fundamentals of Investment (FIN 253)

Unit 4: Risk, Return and Portfolio Management

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of capm and portfolio theory.
• Apply the relevant financial concepts or calculations and explain their assumptions, risks and analytical limits.

Curriculum Scope

• The Capital Assets Pricing Model (CAPM): components of risk, beta, estimating return using CAPM, the security market line
• Traditional approach to portfolio management: Modern portfolio theory: the efficient frontier, portfolio beta, and the risk return trade-off

Detailed Microsyllabus

1. CAPM

   1. Systematic and diversifiable risk.
   2. Beta and security market line.
   3. Estimate required return using supplied inputs.

2. Portfolio theory

   1. Traditional approach and modern efficient frontier.
   2. Portfolio beta.
   3. Explain risk–return trade-offs and model assumptions.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 89–91.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here. Examples involving current laws, rates, institutional products or Nepalese status must identify the relevant period and official materials; no changing numerical or legal requirements are invented here.