Finance

1. Explain the intuition about why we care about a portfolios (or companys) beta. How does it affect our lives?

2. Explain how you would alter the CAPM in order to take into account for the fact that you particularly care about how stocks will perform when Democrats are in office versus when Republicans are in office.

3. Explain the Limits to Arbitrage argument and explain how this should affect how one might profit off of an anomaly that seems to create an alpha.

4. For the following, give a real life example (from your own life-not from the text) of the behavioral bias: Forecasting, Overconfidence, Conservatism, Sample Size Neglect, Framing, Mental Accounting