Interview Question: CAPM

Sample Question #17 (finance – asset pricing)
 
Tell me the intuition behind CAPM. Can you write down the model? What does each of the variables stand for?
 
Two tough advanced questions: How do you test CAPM using real data? What are the major points of criticism against CAPM?
 
(Comment: very few people pay attention to why CAPM really isn’t such a great model…)
 
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