The basics of the Capital Asset Pricing Model

Which of the following are assumptions of the Capital Asset Pricing Model $($CAPM$)?$ Check all that apply.

Investors assume that their investment activities won't affect the price of a stock.

There are no transaction costs.

Investors can borrow an unlimited amount at a risk$-$free rate.

Assets have unique liquidity.

Consider the equation for the Capital Asset Pricing Model $($CAPM$)$:

hat$(r{)}_i=r_{RF}+(hat(r{)}_M-r_{RF})\frac{\text{C}\text{o}\text{v}(r_i,r_M)}{{}_M^2}$

In this equation, the term Cov$\frac{r_i,r_M}{{}^2}M$ represents the

Suppose that the market's average excess return on stocks is $6\mathrm{.}00\%$ and that the risk$-$free rate is $2\mathrm{.}00\%.$ Complete the following table by computing expected returns to stocks for each beta coefficient using the Capital Asset Pricing Model $($CAPM$)$: