2 CAPM is one of the most extensively tested models in finance. The following statements describe the assumptions, methods, and findings of weral of these studies. Based on your understanding of these issues, which of the following statements are true? Check all that apply. Given its assumptions, the CAPM has greater value as a predictive model than as a conceptual framework for the evaluation of risks and returns: In an examination of whether the betas of portfolios of 10 or more randomly selected stocks are stoble over time, Levy (1971) found that the betas of these portfolios are relatively stable, so historical betas are good estimators of future portfolio volatility. Two important hypotheses addressed in tests of the CAPM and SML are that (1) a linear relationship exists between the required return on a security and its beta and (2) the required return of a stock of portfolio exhibiting a beta of 1.0 should equal the required market return ( rM)2 Many studies of the CAPM have used (1) daily or monthly historical returns of the stocks and (2) the rate on both the 30 -day U.S. Treasury bill and the long-term U.S. Treasury bond to estimate the risk-free rate (rrr). Read the following information that addresses the empirical tests that have been conducted on the CaPM and determine whether the information is occurate: Studies of the CAPM support the existence of a statistically significant positive and linear relationship between a portfolio's returns and its beta coefficient, with a slope that is flatter than that predicted by the CAPM. Is this information accurate? Yes No