Present the Capital Asset Pricing Model (CAPM). Discuss how the
model is made operational when it comes to estimating it using the

b. Estimate the simple CAPM model. Report and discuss the results and
whether you believe the estimate you have obtained is appropriate.
Test the hypothesis that the asset is in equilibrium. Discuss the testing
procedure, report the result of the test, and discuss the decision you

c. Assume that you hold a portfolio. Would you buy this asset if your aim
is to make the portfolio you hold risk neutral? Discuss.

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DZUPRA The First Answerer