Question: show work using paper and pen! 7. Explain the CAPM model. [HINT: we need to DISCUSS systematic and unsystematic risks, diversification, how CAPM was designed,

show work using paper and pen!

7. Explain the CAPM model. [HINT: we need to DISCUSS systematic and unsystematic risks, diversification, how CAPM was designed, assumptions CAPM makes, SML line, the model and the variables in the model, things CAPM can't explain, etc. ] (15 points)

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