Suppose one of your classmates states the following:

“As
we all saw from this class, many of the building blocks of the
traditional finance theory were questioned and challenged when it came
to the relevance of such theory to the problems that investors and
managers face in the real world every single day. Building blocks like
all the risk definitions and tools; and even the whole CAPM which lies
at the heart of the working of financial markets. So I would say there
is nothing left of the traditional finance paradigm that we could use to
solve problems in the real world!”

How would you respond to the
above statements? Do you agree or disagree with the above; and which
parts? Explain your thoughts and reasoning in needed details. Make sure
you are very clear in the position you take on any key issue. Also feel
free to reference your position(s) using any of the books or readings we
have used in this course.

Note: Points will be taken off for responses that lack organization and order.

Maximum pages allowed: three pages, double-space, size 12; reference page(s) does not count in the maximum page limit.