Question: Examine and critically discuss the following statement, with reference to relevant theory and empirical evidence: Under the CAPM, the required rate of return on a

Examine and critically discuss the following statement, with reference to relevant theory and empirical evidence: Under the CAPM, the required rate of return on a firm's common stock is determined only by the firm's market risk. If its market risk is known, and if that risk is expected to remain constant, then analysts have all the information they need to calculate the firm's required rate of return and there should be no mispricing of stocks in the financial market.

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