### Abstract

A central paradigm in modern finance theory is the capital asset pricing model (CAPM). While the CAPM is invariably taught in introductory finance courses, a derivation is commonly reserved for postgraduate courses. This is primarily because the available CAPM derivations usually assume an advanced knowledge of pure mathematics. This note provides a simple derivation of the CAPM which requires only an understanding of very basic mathematical concepts. The derivation explicitly highlights the link between the capital market line and the security market line which students often fail to comprehend. Our simple derivation can easily be adopted by instructors at all levels.

Original language | English |
---|---|

Pages (from-to) | 53-60 |

Number of pages | 8 |

Journal | Accounting and Finance |

Volume | 33 |

Issue number | 1 |

DOIs | |

Publication status | Published - 1993 |

Externally published | Yes |

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### Cite this

*Accounting and Finance*,

*33*(1), 53-60. https://doi.org/10.1111/j.1467-629X.1993.tb00194.x

}

*Accounting and Finance*, vol. 33, no. 1, pp. 53-60. https://doi.org/10.1111/j.1467-629X.1993.tb00194.x

**A derivation of the CAPM for pedagogical use.** / Brailsford, Tim; Faff, Robert.

Research output: Contribution to journal › Article › Research › peer-review

TY - JOUR

T1 - A derivation of the CAPM for pedagogical use

AU - Brailsford, Tim

AU - Faff, Robert

PY - 1993

Y1 - 1993

N2 - A central paradigm in modern finance theory is the capital asset pricing model (CAPM). While the CAPM is invariably taught in introductory finance courses, a derivation is commonly reserved for postgraduate courses. This is primarily because the available CAPM derivations usually assume an advanced knowledge of pure mathematics. This note provides a simple derivation of the CAPM which requires only an understanding of very basic mathematical concepts. The derivation explicitly highlights the link between the capital market line and the security market line which students often fail to comprehend. Our simple derivation can easily be adopted by instructors at all levels.

AB - A central paradigm in modern finance theory is the capital asset pricing model (CAPM). While the CAPM is invariably taught in introductory finance courses, a derivation is commonly reserved for postgraduate courses. This is primarily because the available CAPM derivations usually assume an advanced knowledge of pure mathematics. This note provides a simple derivation of the CAPM which requires only an understanding of very basic mathematical concepts. The derivation explicitly highlights the link between the capital market line and the security market line which students often fail to comprehend. Our simple derivation can easily be adopted by instructors at all levels.

UR - http://www.scopus.com/inward/record.url?scp=84985534706&partnerID=8YFLogxK

U2 - 10.1111/j.1467-629X.1993.tb00194.x

DO - 10.1111/j.1467-629X.1993.tb00194.x

M3 - Article

VL - 33

SP - 53

EP - 60

JO - Accounting and Finance (ONLINE)

JF - Accounting and Finance (ONLINE)

SN - 0810-5391

IS - 1

ER -