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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 the

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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 the CAPM. [15 marks] (b) Compare the CAPM with the Multifactor Arbitrage Pricing Theory (APT hereafter) Model. [15 marks] (c) What are the main shortcomings of the Multifactor APT models? What the research has proposed to overcome these drawbacks? Discuss fully. [10 marks]

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