Is CAPM part of modern portfolio theory?Explain how.
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The Modern Portfolio Theory (MPT) of Harry Markowitz (1952) introduced the analysis of portfolios of investments by considering the expected return and risk of individual assets and, crucially, their interrelationship as measured by correlation. Prior to this investors would examine investments individually, build up portfolios of favored stocks, and not consider how they related to each other. In MPT diversification plays an important role.
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