Question: 6. Please explain everything you know about the CAPM. What are the important model assumptions? What are the main theoretical results and implications of the

6. Please explain everything you know about the CAPM. What are

6. Please explain everything you know about the CAPM. What are the important model assumptions? What are the main theoretical results and implications of the model? How would we go about testing the CAPM? 7. Let's consider a European call option with a strike price of K and maturity T. The price of the underlying stock (or an equity index) is S, and the risk-free rate is rs. The volatility of the underlying stock's return is o. This stock does not pay dividends. How would you determine the value of this European call option? Please explain everything you know about option pricing theories

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