**Summary of Chapter I**

- Geometric vs. arithmetic returns
- Capital Market History
- Equity Premium=8.5%
- standard deviation as a measure of risk

**Summary of Chapter II**

- Risk and Return
- Correlation and diversification
- The efficient frontier
- The efficient frontier with a riskless asset

**Summary of Chapter III**

- iso-utility curves
- shortfall approach and Sharpe ratio
- tangency portfolio

**Summary of Chapter IV**

- What is tangency portfolio
- CAPM equilibrium theory
- “Birthday Cake” Proof

**Summary of Chapter V**

- Correlations drive attractiveness of stock
- The security market line
- idiosyncratic risk is not prices
- relationship between risk and return is linear
- portfolio beta = weighted average of component betas

**Summary of Chapter VI**

- APT motivated by SML
- Arbitrage in expectations
- APT does not restrict systematic risk to one factor

**Summary of Chapter VII**

- Beta estimated via regression
- Leverage affects beta
- DCF using discount rate
- M&A using discount rate
- project choice

**Summary of Chapter VIII**

- Liquid markets process information
- expectations arbitrage happens fast
- weak form = past prices
- semi-strong form = current and past public information
- strong form = all current and past information
- technical analysis