What Is Capital Market Equilibrium?

The capital market theory is a theory that explains the relationship between the expected equilibrium returns of investment assets and their return risks. Given the assumptions, the capital market equilibrium model can be derived and derived from the two-parameter portfolio theory. Take the most famous Sharp-Linle capital asset pricing model as an example: The model has the following assumptions: (1) no transaction costs, no taxes, no indivisibility; (2) all market participants (companies and investors) ) Are all competitors; (3) a single investment period; (4) investors make investment decisions based on the expected return of portfolio securities and standard deviations; (5) the expectations are similar or consistent; (6) there is no Risky assets and available for borrowing. ^[1]