Security Market Line & Alpha
§2 · CAPMThe SML plots the CAPM-required return against market risk (β). An asset off the line is mispriced; the vertical gap to the line is its alpha.
The Market Model (single-index regression)
§3 · EstimationSimulate n months of excess returns from a known β, then estimate it by OLS. Watch estimation noise shrink as the sample grows — hit Resample to redraw.
Variance decomposition (true parameters)