b. How is stock market liquidity defined and what factors determine whether a market for a particular stock is likely to be liquid? Building on your description of the factors that influence liquidity, do you expect it to be fairly stable across time? [Write no more than 8 sentences.] (25 marks) c. Give a brief overview of the evidence for and against the Capital As- set Pricing model. Refer explicitly to published work on this topic. Given this evidence, what is your view on the value of the CAPM to investors, risk managers and others? [Write no more than 8 sentences.] (25 marks) d. Give a concise and intuitive explanation which explains why modern finance theory emphasises covariances between returns when dis- cussing the measurement of risk faced by investors rather than variances of returns. Give example to illustrate your arguments. [Write no more than 8 sentences.] (25 marks)