Diversification and risk.

Capital Asset Pricing Model (CAPM). Key assumptions. The market portfolio.

Global efficient frontier.

Tangency portfolio.

Utility function, indifference curves, and optimal portfolio.

Tobin's model.

Assumptions.

Risk-free security.

Capital Allocation Lines (CAL).

Global efficient frontier.

Tobin's model.

Assumptions.

Risk-free security.

Capital Allocation Lines (CAL).

Global efficient frontier.

Tangency portfolio.

Markowitz model: weight space and investment opportunity set, portfolio frontier, global minimum-variance portfolio, efficient frontier, utility function and indifference curves, optimal portfolio.