The CAPM says that for the cross$-$section of returns it should hold that

E

$[$

R

i

$$

r

f

$]=$

i

E

$[$

R

M

$$

r

f

$]$

$,$

for all assets

i

$.$ Gavin Jones argues that the CAPM theory has no content, since if we know

E

$[$

R

i

$$

r

f

$]$

and

E

$[$

R

M

$$

r

f

$]$

$$ for example by estimating these quantities based on series of returns $$ we can solve

this equation for

i

so it will always hold and thus the CAPM will always be true. Is he right? Why

or why not? $(4$ points$)$