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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
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. O There are no transaction costs. Investors assume that their investment activities won't affect the price of a stock. Investors can borrow an unlimited amount at a risk-free rate. Taxes are accounted for. Consider the equation for the Capital Asset Pricing Model (CAPM): t'i = RF + M -RF) X Covri, rm) ody In this equation, the term m - PRF) represents the expected rate of return on Stock i expected rate of return on Stock i lete the followin Suppose that the market's average excess return on expected returns to stocks for each beta coefficient average return additional return offered by a stock to induce investment
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