Question: 1. If based on the CAPM regression on Facebook during 2017 - 2018, we get the following regression equation: y = 0.005 + 1.26x What

1. If based on the CAPM regression on Facebook during 2017 - 2018, we get the following regression equation:

y = 0.005 + 1.26x

  • What is Facebook's alpha? What is its historical beta? What is Facebook's future beta?

  • What is your judgement about Facebook based on the performance in 2017-2018? Is it a good investment according to the criteria we mentioned in the class?

2. True or False: risk-free asset should provide a return of 0%. Explain.

These are both part of the same problem.

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