Explain capital asset pricing model, Corporate Finance

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Question 1:

Compare and contrast the Capital Asset Pricing Model with that of the Arbitrage Pricing Theory.

Question 2:

(a) Explain the concept of stock market efficiency.
(b) "If share prices follow a random walk, the stock market is efficient." Discuss.

Question 3:

(a) Describe how you would evaluate the performance of a fund manager?
(b) Explain the practical difficulties you might encounter in your task?

Question 4:

(a) Using a world of a two risky assets, derive the minimum variance portfolio.
(b) Show the competing theories underlying the term structure of interest.

Question 5:

Write briefly on the following:
(i) Capital Market Line and Security Market Line
(ii) Joint Hypothesis Dilemma
(iii) Size effect with respect to stock market anomalies
(iv) Systematic and Unsystematic risk


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