Question: Why does required returns (as calculated by the CAPM) not always coincide with realized returns? Markets are inefficient Beta is estimated not observed Constructing the

Why does required returns (as calculated by the CAPM) not always coincide with realized returns?

 Markets are inefficient 

 Beta is estimated not observed

 Constructing the true market portfolio is difficult in practice 

 Investors are not mean-variance optimizers 

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