Question: Required: (a) State the Capital Asset Pricing Model (CAPM) equation and explain what kinds of relationships it shows. Should you include standard deviation of returns

Required:

(a) State the Capital Asset Pricing Model (CAPM) equation and explain what kinds of relationships it shows. Should you include standard deviation of returns in the calculation of the expected return on a security using CAPM? Why? Explain your answers

(b) Based on Capital Asset Pricing Model (CAPM), should you recommend to buy or sell stocks of Casa and Yale respectively? Support your recommendations with all relevant calculations. Conclude your answer

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