Financial Economics class.

Reference - Investments by Bodie, Kane and Marcus, 10th edition, but the use of the 9th or 11th edition.

Question 4. One of the assumptions needed for the 'IWo Fund Theorem to hold is that investors must have homogeneous expectations and information (i.e., the same input list). Why is this assumption needed? That is, what would happen in the absence of this assumption? Question 10. Suppose we are in the single index model. There is one stock {stock A) with 04A : 2%, 5A : 3. The market index has expected return ]E[1"M] : 6%. If stock A has expected return [T'A] : 10%! what must the riskfree rate be