Evaluate whether the following scenarios are consistent or inconsistent with the Capital Asset Pricing Model (CAPM). You must briefly explain your answers to receive full points.

(Part A): Stock A has an expected return that is higher than the expected return on the market portfolio.

This is consistent with the CAPM.

This is not consistent with the CAPM.

(Part B): Stock B has an expected return that is lower than the risk-free rate.

This is consistent with the CAPM.

This is not consistent with the CAPM.

(Part C): Stock C has a covariance of zero with the market portfolio and an expected return that is higher than the risk-free rate.

This is consistent with the CAPM.

This is not consistent with the CAPM.

(Part D): The optimal portfolio for an individual investor has a short position (i.e., a negative portfolio weight) in Stock D.

This is consistent with the CAPM.

This is not consistent with the CAPM.

(Part E): Stock E has a beta of 1.2 with the market portfolio. In 2010, the market portfolio had a return of 17.9%. Stock E had a return of 14.1% over the same year.

This is consistent with the CAPM.

This is not consistent with the CAPM.

* Please explain all the answers!