Portfolio Management

Part1
Optimal Asset Allocation = Investor's Indifference Curve + Market's Efficient Frontier

Part2 Passive Management
CAL (Capital Allocation Line) = Risky Portfolio A + Risk-Free Asset (Rf)
CML (Capital Market Line) = CAL + Homogeneous Expectations

Part3 Active Management
SML (Security Market Line) = CML & Systematic Risk
= CAPM (Captial Asset Pricing Model): Reuired Rate or Return = Rf + Beta(Rm-Rf)

Expected Rate of Retrun = (P1-P0) / P0

Expected Return > Required Return -> Long position B/C it's undervalued (기대수익률이 SML 라인 위에 있을 때)
Expected Return < Required Return -> Short position B/C it's overvalued (기대수익률이 SML 라인 밑에 있을 때)