CAPM $.(1)$

Write down the CAPM equation and explain its statistical and economic

implications. $(1$ point$)$

Create a portfolio that replicates the payoff of a call option with stocks and

bonds, derive an equation to value the call option, and compare it to the

Black$-$Scholes$-$Merton option pricing formula. $(1$ point$)$

$$

$.(1)$

Derive a risk$-$neutral probability equation and explain how to evaluate

option value using it$.(1$ point$)$

$.(1)$

Explain the three efficient market hypotheses. $(1$ point$)$

$$ Miller and Modigliani $($MM$).$

$.(1)$

Explain the theory of Miller and Modigliani $($MM$)$ in payout and debt policy.

Also derive the formula for the cost of equity capital in debt policy.

$(1$ point$)$

you can ignore korean