1.) The CAPM changed the way we look at risk. Explain

2.) How confident would you be trading on a CAPM model? Explain.

3.) How many different covariance terms would there be in a twelve-asset portfolio? How many variance items?

4.) What is meant by the idea of sequencing affecting the cost of financing and why the WACC preferred discount rate?

5.) Why does the WACC work for the average risk of the firm but not for very risky projects?

6.) Explain why the arbitrage pricing model (APT) is not very popular as compared to the CAPM. What are the two major problems with APT?