Question: 1a. Describe some evidence that a single factor model like CAPM is insufficient to describe historical stock returns. How are these deficiencies addressed by the

1a. Describe some evidence that a single factor model like CAPM is insufficient to describe historical stock returns. How are these deficiencies addressed by the four factor model?

1b. What explains the covariance between stocks in an economic factor model? In other words, what variables affect the extent to which two stocks would tend to move together?

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