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May 01, 2023


Part A.

The statement is false. This is because the CAPM model helps identify the risk and the corresponding return from the asset investment. Moreover, it assesses assets as well as their security and risk conditions having a return on the investment and enables an individual invest. The provided statement gives false evidence as there is a required risk premium on the security or the investment which bears the systematic risk. Volatile securities do not necessarily require CAPM. Using the model formula as below; 

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