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(1) CAPM predicts that a security's risk premium increase in proportion to its beta of the security, not its volatility. Justify this statement using Figures

(1) CAPM predicts that a security's risk premium increase in proportion to its beta of the security, not its volatility. Justify this statement using Figures 10.6 and 10.7 in Chapter 10.

(2) Explain why CAPM (is used)

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