Which of the following is an assumption of the CAPM? Investors should consider their person al income taxes in making investment decisions There are transaction costs associated with buying and selling assets. An individual investor can affect the price of a stock by buying or selling stocks Investors have the same expectation regarding expected returns, the variance of returns, and the correlation structure between pairs of stocks. Question 3 The collapse of Long-Term Capital Management (LTCM) is a classic risk management case study. Which of the following statements about risk management at LTCM is correct? LTCM did not run any stress scenarios on its VaR model. LTCM's traders did not respond quickly enough to changes in market volatility as there were significant barriers that blocked the flow of information. (C) LTCM failed to account for the illiquidity of its largest positions in its risk calculations. LTCM's use of high leverage is evidence of poor risk management. Question 4 An investment manager is given the task of beating a benchmark. Hence the risk should be measured in terms of Loss attributed to the benchmark (B) Loss relative to the benchmark Loss relative to the initial investment Loss relative to the expected portfolio value