please write about 5-6 sentences for each question 1- Why do assets of the same type who positive covariances of returns with each other? Would you expect positive covariances of returns between different types of assets such as returns on Treasury bills, General Electric common stock, and commercial real estate? Why or why not?2- While the Capital Asset Pricing Model (CAPM) has been widely used to analyze securities and manage portfolios for the past 50 years, it has also been widely criticized as providing too simple a view of risk. Describe three problems in relation to the definition and estimation of the beta measure in the CAPM that would support this criticism.3- Both the capital asset pricing model and the arbitrage pricing theory rely on the proposition that a no-risk, no-wealth investment should, on average, no return. Explain why this should be the case, being sure to describe briefly the similarities and differences between the CAPM and the APT. Also, using either of these theories, explain how superior investment performance can be established.4- How might a jewelry store and a grocery store differ in terms of asset turnover and profit margin? Would you expect their return on assets to differ assuming equal business risk? Discuss.
St Cloud State Capital Asset Pricing Model & Arbitrage Pricing Theory Questions
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