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2. a) Explain (briefly) what the Capital Asset Pricing Model predicts about the expected returns on different assets? (5p) b) Explain (briefly) how liquidity and
2. a) Explain (briefly) what the Capital Asset Pricing Model predicts about the expected returns on different assets? (5p) b) Explain (briefly) how liquidity and human capital risk might explain why the CAPM appears to work poorly in practice. (5+5p) (total 15p) 3. Discuss briefly arguments for and arguments against international investing (as compared to local investing). (2p per unique argument, max 10p) 2. a) Explain (briefly) what the Capital Asset Pricing Model predicts about the expected returns on different assets? (5p) b) Explain (briefly) how liquidity and human capital risk might explain why the CAPM appears to work poorly in practice. (5+5p) (total 15p) 3. Discuss briefly arguments for and arguments against international investing (as compared to local investing). (2p per unique argument, max 10p)
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