Question: CAPM is the most logical and intuitively appealing method to measure risk and relate it to required returns. Are there any reasons to question the

CAPM is the most logical and intuitively appealing method to measure risk and relate it to required returns. Are there any reasons to question the validity of the CAPM? Explain your answer 30 marks 2. One problem with a market risk analysis relates to differences in reported beta coefficients.

Explain and elaborate why reported historical beta values are so inconsistent.

Do historical betas provide good measures of the future riskiness of firms?

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Question 1 CAPM Validity Concerns While the Capital Asset Pricing Model CAPM is widely used and intuitively appealing several reasons question its validity Market Efficiency Assumption CAPM assumes ma... View full answer

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