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The three main elements in the modern theory of finance are the efficient markets hypothesis, the...

The three main elements in the modern theory of finance are the efficient markets hypothesis, the capital asset pricing model and portfolio theory. Explain and evaluate the proposition that each of these elements depends for its reliability on the validity of the other two.

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Answer #1

ANSWER :-

☆ The efficient market hypothesis , the capital asset pricing model and the portfolio hypothesis all are related.

●The efficient markets reveals to us that the news is additionally limited in the market and subsequently we need to search for some other developements.

●Additionally we should think about the beta since it relies upon the market .

●Presently likewise the CAPM hypothesis additionally mulls over the beta so these two speculations are associated.

●Presently we have the portfolio hypothesis where we compute the portfolio beta dependent on the sythesis of the offers in the portfolio so the regular connection between all the three elements  is the "beta''.

PLEASE UPVOTE.

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