3. The basics of the Capital Asset Pricing Model Which of the following are assumptions of the Capital Asset Pricing Model (CAPM)? Check all that apply. All assets are perfectly.divisible and liquid. Taxes are accounted for There are no transaction costs. Investors assume that their investment activities won't affect the price of a stock. Consider the equation for the Capital Asset Pricing Model (CAPM): Cover =rer CM - XX In this equation, the term -r represents the expected rate of return on Stocki Suppose that the market's average excess retum on stocks is 12.00% and that the risk-free rate is 3.00%. Complete the following table by computing expected returns to stocks for each beta coefficient using the Capital Asset Pricing Model (CAPM): be -0.70 0.20 Expected Return to Stocks (%) -5.40 5.40 d 1.00 15.00 27.00 2.00 Based on the CAPM and your calculations for the return to stocks, what does it mean when the coefficient bi = 1? The stock is more volatile than the market, The stock's return correlates with the stock market as a whole, The stock is less volatile than the market