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Lecture 6: The Cost of Capital
Lecture Summary 
● Market risk is the only relevant risk in a diversified portfolio. 
● Capital Asset Pricing Model (CAPM) 
○ Calculations 
○ Critiques: Its assumptions & arguments/evidence against them. 
● Cost of Capital (WACC) 
○ Always after-tax, unless otherwise indicated.
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- Lecture notes
- • 7 pages •
Lecture Summary 
● Market risk is the only relevant risk in a diversified portfolio. 
● Capital Asset Pricing Model (CAPM) 
○ Calculations 
○ Critiques: Its assumptions & arguments/evidence against them. 
● Cost of Capital (WACC) 
○ Always after-tax, unless otherwise indicated.