1. how can correlation and covariance be used to manage the trade-off between ri

1. how can correlation and covariance be used to manage the trade-off between ri

1. how can correlation and covariance be used to manage the trade-off between risk and return? Provide an example.
2. The CAPM is the most-recognized model to explain stock price returns, and forms the foundation of Modern Portfolio Theory. The CAPM is built on a single measure of risk that explains asset returns. What assumptions underlie the development of the CAPM? What are some critiques of the CAPM (French and Fama and Richard Roll authored studies)? Finally, explain the required rate of return calculation for the stock that you are tracking for this course.