DISCUSSION.

The article comments on a paper published within the issue, "New Evidence on the Capital Asset Pricing Model," by Irwin Friend, Randolph Westerfield, and Michael Granito. The author reviews the paper and discusses the two tests used on the Capital Asset Pricing Model (CAPM). The model is first tested on its own ground, then using an expanded set of securities including bonds and stocks. The author notes that greater availability of bond data makes it possible to better estimate the market portfolio. It is also mentioned that individual bond returns may be used for cross-sectional testing of the CAPM.