Which of the following are assumptions of the Capital Asset Pricing Model (CAPM)? Check all that apply. O Asset quantities are given and fixed. There are no transaction costs. Taxes are accounted for. All investors focus on a single holding period. O Consider the equation for the Capital Asset Pricing Model (CAPM): Cov(ri, rm) ři = rre + Cím – PRF) x In this equation, the term Cov(ri, rm) / om represents the Suppose that the market's average excess return on stocks is 12.00% and that the risk-free rate is 1.00%. Complete the following table by computing expected returns to stocks for each beta coefficient using the Capital Asset Pricing Model (CAPM):
Suppose that the market's average excess return on stocks is 12.00% and that the risk-free rate is 1.00%. Complete the following table by computing expected returns to stocks for each beta coefficient using the Capital Asset Pricing Model (CAPM): b; Return to Stocks (%) -0.30 0.50 1.00 5.00 Based on the CAPM and your calculations for the return to stocks, what does it mean when the coefficient b; < 1? O The stock is more volatile than the market. O The stock is less volatile than the market. O The stock's return correlates with the stock market as a whole.