One of the assumptions of the CAPM is that investors exhibit myopic behavior.What does this mean?
A)They plan for one identical holding period.
B)They are price takers who can't affect market prices through their trades.
C)They are mean-variance optimizers.
D)They have the same economic view of the world.

Question

Quizplus · Accepted Answer

Myopic behavior refers to investors only planning for one holding period and not considering the long-term implications of their investment decisions. This assumption is necessary for the CAPM to hold because it assumes that all investors have the same time horizon and are only concerned with their portfolio returns over the specific holding period, rather than the overall economic conditions affecting the market.

One of the Assumptions of the CAPM Is That Investors