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My understanding is that the Black-Scholes formula can be derived via the Capital Asset Pricing Model, I cannot find anything about this on the net. Could someone demonstrate this (in a hopefully not too technical way)?

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    $\begingroup$ It is in the original Black and Scholes paper (JPE, 1973). It is the familiar dyanmic hedging argument, except looking at the beta of the stock and the "beta of the option", you construct a hedging portfolio such that it's beta is zero. This derivation has been superseded by the other derivation; the hedging portfolio is not only zero beta but atually zero risk. $\endgroup$
    – nbbo2
    Sep 6, 2017 at 16:12
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    $\begingroup$ You can also find it in Paul Wilmott's book "FAQs in Quantitative Finance" in the Chapter "Ten Different Ways to Derive Black-Scholes". $\endgroup$ Sep 6, 2017 at 16:19

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Here, in section 8:

"Four derivations of the Black-Scholes Formula", F. D. Rouah (http://www.frouah.com/)

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