Unit 4: The CAPM & Diversification

Overview

Volatility, Risk, and Uncertainty

Returns

Risk and Reward

What Does Risk Look Like?

The Five Levels of Risk & Uncertainty

Drug Development & Risk

The CAPM

Systematic vs. Idiosyncratic Risk

The CAPM

The CAPM in Healthcare

The WACC

Portfolio Theory

Motivation

Mean-Variance Analysis I

Mean-Variance Analysis II

The Efficient Frontier, Capital Market Line, and Tangency Portfolio

Special Cases

Portfolio Theory in a Biomedical Context

What is an Orphan Disease?

Alexion Pharmaceuticals

Orphan Drug Financials

Student Questions

Divide and Conquer

Pricing

Solved Practice Problems

Portfolio Weights

Three Risky Assets

Megafund Example

CAPM Example

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