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(a) Discuss how well the Capital Asset Pricing Model (CAPM hereafter) works. Your answer should include at least three criticisms of beta as used in

(a) Discuss how well the Capital Asset Pricing Model (CAPM hereafter) works. Your answer should include at least three criticisms of beta as used in the CAPM.

(b) Compare the CAPM with the Multifactor Arbitrage Pricing Theory (APT hereafter) Model.

(c) What are the main shortcomings of the Multifactor APT models? What the research has proposed to overcome these drawbacks? Discuss fully.

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