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Which of the following statements about the capital asset pricing model (CAPM), which is the "father" of the security market line (SML), is(are) most correct?
The CAPM is based on a restrictive set of assumptions.
It has not been empirically verified.
In general, its inputs are difficult to estimate, particularly E(g).
Despite its deficiencies, it provides investors with a rational way of thinking about required rates of return.
All of the above responses are correct.
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