Explain 'Black-Litterman Model'.
Explain 'Black-Litterman Model'.
Approach: Describe an asset allocation model that combines market equilibrium with investor views.
An analytical framework for portfolio construction that starts with a market equilibrium (CAPM) and allows investors to incorporate subjective 'views' to adjust asset weights.
Follow-up: What problem in Markowitz optimization does this solve?
Key concepts: bayesian inference, markowitz, equilibrium.