Respond to the following:

Please state if you are in full agreement with the key assumptions or the specification of CAPM and provide reasons. For example, one key assumption is that investors are expected to behave rationally wherein they diversify their wealth by seeking portfolios that earn highest returns for a given level of risk or for a given level of returns seek the least risky portfolio. Can you think of situations where this might be violated? Please remember that most theories are incomplete and we should fearlessly question them in search of a better answer. Also, as an investor is risk and return all that you care about? Let us suppose that you received a cash gift of $10,000 for investment purposes. In your personal situation, how would you invest it and do you think of yourself as investor that is truly rational as per the CAPM assumption stated above?