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CAPM and the security market line

Unit 4: Fundamentals of Risk and ReturnTopic 4 of 4
Browse the Fundamentals of Financial Management syllabus

Fundamentals of Financial Management

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What the syllabus expects

  • Capital asset pricing model
  • Beta coefficient
  • Security market line
  • Risk-return relationship

CAPM and the security market line

Bachelor of Business Studies (BBS) — Second Year

Subject: Fundamentals of Financial Management (MGT 215)

Unit 4: Fundamentals of Risk and Return

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

  • Explain the scope and key elements of capm and the security market line.
  • Apply the relevant financial model, calculation or analytical approach and explain its assumptions and decision implications.

Curriculum Scope

  • Capital asset pricing model
  • Beta coefficient
  • Security market line
  • Risk-return relationship

Detailed Microsyllabus

  1. CAPM foundations

    1. Systematic and diversifiable risk.
    2. Beta as relative market sensitivity.
    3. Assumptions and limits of the model.

  2. Security market line

    1. Risk-free rate and market risk premium.
    2. Calculate the beta-related required return.
    3. Interpret a security's position relative to the modeled relationship.

Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 41-43.

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.