(Answered) 1 what are the perfect market assumptions2 explain whether

Economics

1. What are the perfect market assumptions?

2. Explain whether the following statements are true or false. In each case, provide justi?cation for your answer:

In a perfect capital market, expected returns on all bonds must beequal to the risk-free (T-bill) rate.
In a perfect capital market with risk-neutral investors, expected re-turns on all bonds must equal the risk-free rate.

3. Write down the CAPM formula. What are the economy-wide inputs and what are the ?rm-speci?c inputs?

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