Question: Regarding capital asset pricing model: 1) Why it is important to assume that investor's already hold the value-weighted market, or tangency, portfolio in order to

Regarding capital asset pricing model:

1) Why it is important to assume that investor's already hold the value-weighted "market", or tangency, portfolio in order to apply CAPM.

2) Does the risk-free asset need to exist in order for us to derive CAMP? If not, how do investors achieve 2-fund separation?

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