CAPITAL ASSET PRICES: A THEORY OF MARKET EQUILIBRIUM UNDER CONDITIONS OF RISK.

The article discusses a model of capital assets pricing that can be used to predict market behavior with risk as a factor in the analysis. A graph is shown that depicts how the risk that investors are willing to take can impact the expected return. When managing a portfolio, investors are likely to choose investments on the basis of the expected value that will increase their personal wealth and the standard deviation. The article concludes that investors will settle for a modest rate of return on defensive securities than they would expect from more aggressive kinds of investments.