The CAPM is one of the most extensively tested models in finance. The following statements describe the assumptons, methods, and findings of several of these studies. Based on your understanding of these issues, which of the following statements are true? Check all that apply. In an examination of whether the betas of individual securities remained stable over time, Levy (1971) found that the past betas of individual stocks are unstable and therefore are not good indicators of a company's future risk. In theory, the CAPM should be applied to only stocks and not to other types of financial assets. Although the CAPM is a forward-looking model, the lack of ex ante (predictive) dato means that it has always been tested using ex post (historical) data. Two importent hypotheses addressed in tests of the CAPM and SML are that (1) the intercept on the vertical axis should equal the riskfree rate (rRP) and (2) the required return on a stock or portfolio exhibiting a beta of 1.0 should equal the required market return ( r M). Read the following information that addresses the empirical tests that have been conducted on the CAPM and determine whether the information is: accurate: Read the following information that addresses the empirical tests that have been conducted on the capm and determine whether the informatian is accurate: One of the two major groups of empirical studins undertaken to assess the valicity of the capm addressed the stability of the risk-frea cate of return (or the vertical intercept term in the SML). Is this informabion accurate? Yes No