Question: Question 1: CAPM says that given the expected payoff to a stock, the only thing that should matter in determining the expected returns of the

Question 1: CAPM says that given the expected payoff to a

Question 1: CAPM says that given the expected payoff to a stock, the only thing that should matter in determining the expected returns of the stock (and hence its price) is the correlation of its payoffs with the market. This requires many assumptions to be true. Discuss the assumptions and how realistic the assumptions are

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