1. a.Modern Portfolio Theory (MPT) has greatly impacted how investors construct their portfolios to optimize returns for a given level of market risk. Reflect on the assumptions made by MPT and its significance in portfolio management. Discuss the concept of the efficient frontier and how it aids in the process of asset allocation. b.Capital Asset Pricing Model (CAPM) provides a method to calculate the expected return on an investment, given its systematic risk. Explain the formula of CAPM and the role of Beta in this model. Discuss the limitations and the practical implications of CAPM in financial decision making. How does the concept of the security market line (SML) assist in understanding the risk-return tradeoff in the CAPM context? c.Efficient Market Hypothesis (EMH) has been a controversial topic in financial economics. Discuss the three forms of market efficiency as proposed by the EMH. Analyze whether real-world financial markets can ever attain perfect efficiency. How can anomalies and behavioral biases of investors challenge the validity of EMH?