3. The basics of the Capital Asset Pricing Model Aa Aa Which of the following are assumptions of the Capital Asset Pricing Model (CAPM)? Check all that apply. Transaction costs are netted against expected returns. All assets are perfectly divisible and liquid. All investors focus on a single holding period. There are no transaction costs. Consider the equation for the Capital Asset Pricing Model (CAPM): = PRF + (rm - PRF) Cov(n,r) o In this equation, the term (me - PRF) Cov, on represents the In this equation, the term (RF) X Covn, in) represents the OM Suppose that the market's average excess return on stocks is 6.00% and that the risk-free rate is 1.00%. Complete the following table by computing expected returns to stocks for each beta coefficient using the Capital Asset Pricing Model (CAPM): bi -0.50 Return to Stocks (%) 0.30 1.00 3.00 Based on the CAPM and your calculations for the return to stocks, what does it mean when the coefficient b