3. The basics of the Capital Asset Pricing Model Which of the following are assumptions of the Capital Asset Pricing Model (CAPM)? Check All assets are perfectly divisible and liquid. Assets have unique liquidity. Investors assume that their lwestment activities won't affect the price of a stock There are no transaction costs. Conslder the equation for the Capital Asset Pricing Model (CAPM): ri=rRP+(rMrKF)rMCon(rirM) Suppose that the market's average excess return on stocks is 12.00% and that the risk-free rate is 3.00%. Complete the foliowing table by computing expected returns to stocks for each beta coeffielent using the Capital Asset Pricing Model (CAPM): Based on the CAPM and your calculations for the return to stocks, what does it mean when the coefficient bi=1 ? The stocic's ceturn correlates with the stock market as a whole. The stock is less voiatile than the market. The stock is more volatile than the market