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.