Volatility Drag: Arithmetic vs. Geometric
Why the geometric average trails the arithmetic by ½σ²: the +100%/−50% example, simulated wealth paths against the "arithmetic promise," and the 1991–2025 asset-class table.
Topic 1 · §4Fee Drag: Mutual Fund Fees
Front-end loads vs. level loads compounding over the holding period — watch the Class A/B winner flip with the horizon, and the active-vs-passive gap grow to six figures.
Topic 1 · §6Market Depth & Price Impact
At what price can you sell 30 shares? Tap the quiz, watch a market order eat the book level by level while the arithmetic builds, and read the whole schedule off the depth-cost curve.
Topic 2 · §3Two-Asset Diversification
Trace the opportunity set of two risky assets as correlation and portfolio weight change; find the minimum-variance portfolio.
Topic 3 · §4Capital Allocation & Utility
Combine a risky portfolio with the risk-free asset along the CAL; see how risk aversion picks the optimal allocation w*.
Topic 3 · §2–3Efficient Frontier & Tangency
Build the minimum-variance frontier from N assets; locate the global MVP and the max-Sharpe tangency portfolio.
Topic 3 · §5CAPM / SML & Market Model
Plot the security market line and alpha; simulate the market model and watch OLS β̂ estimation noise shrink with the sample.
Topic 4 · §2–3Diversification & Systematic Risk
Grow an equal-weight portfolio one asset at a time: the 1/N variance term vanishes while correlation sets the systematic floor.
Topic 4 · AppendixAnomaly Lab: The CAPM on Trial
Sort stocks into decile portfolios, regress on CAPM, FF3, or Carhart factors, and watch which alphas survive — the SML is too flat, and momentum refuses to die.
Topic 5 · §1–2Keynesian Beauty Contest
Play the 2/3-of-the-average game live: students submit by QR code, the histogram reveals the mean, target, and winner — and repeated rounds converge toward the Nash equilibrium of 0.
Topic 6 · §3Duration & Bond Pricing
The price–yield curve with the duration tangent vs. exact repricing, the cash-flow fulcrum at t = D, and forward rates implied by the spot curve.
Topic 7 · §3–4Black–Scholes Option Pricing
Price European calls and puts: intrinsic vs. time value, the delta hedge ratio, comparative statics in σ and T, and put–call parity.
Topic 8 · §3–4