1. Draw some possible security markets relations that would not be consistent with the CAPM.
2. Does the empirical evidence suggest that the CAPM is correct?
3. Why do you need to understand the CAPM?
4. Under what circumstances is the CAPM a good model to use? What are the main arguments in favor of using it? When is it not a good model?
5. Explain the kinds of projects for which it is important to get accurate equity premium estimates.