Capital Market Theory, CML, CAPM, SML & Beta - CFA Level 1 Portfolio Management 2026

Get our FREE CFA Level 1 summaries: https://www.finquiz.com/cfa/level-1/s... Learning Module 2: Portfolio Risk and Return: Part II 0:00 Capital Market Theory - CFA Level 1 Introduction 2:15 Adding a Risk-Free Asset and Capital Allocation Line CAL 5:01 CAL Dominance and Investor Choice 5:30 Homogeneous Expectations and the Market Portfolio 6:33 From CAL to Capital Market Line CML 9:00 CML Intuition - Lending, Tangency Portfolio, and Leveraging 12:01 CML Formula and Quick Example 13:59 Lending vs Borrowing on the CML 14:45 Real-World Kink in the CML 16:45 Leverage Portfolios and Borrowing Beyond the Market Portfolio 21:03 Mr. Miles Leverage Example 25:48 Total Risk vs Systematic Risk 32:02 Why Return-Generating Models Are Used 34:28 Macroeconomic, Fundamental, and Statistical Factor Models 37:46 Single-Index Model Explained 39:06 Market Model in Practice - Alpha and Beta 43:24 Beta Explained for CFA Level 1 49:09 Capital Asset Pricing Model CAPM Basics 51:33 CAPM Assumptions 55:05 Security Market Line SML Explained 57:54 CML vs SML vs CAL 59:06 Portfolio CAPM and Portfolio Beta 1:00:16 Applications of CAPM 1:03:05 Limitations of CAPM 1:05:51 Arbitrage Pricing Theory APT 1:07:04 Fama-French and Carhart Factor Models 1:09:18 Performance Appraisal Introduction 1:10:14 Sharpe Ratio 1:11:25 Treynor Ratio 1:12:12 M Squared Measure 1:13:06 Jensen’s Alpha 1:15:43 CAPM in Portfolio Construction and Security Selection 1:16:15 Security Characteristic Line SCL 1:17:11 Using Alpha to Identify Undervalued and Overvalued Securities 1:19:47 Information Ratio Explained 1:21:09 CAPM in Real-World Portfolio Management 1:22:18 Final Exam Tips and Wrap-Up