Which of the following regarding investors and the CAPM is true?
A) Investors recognize that all the assumptions of the CAPM are unrealistic.
B) Investors recognize that all of the CAPM assumptions are not unrealistic.
C) Investors are not aware of the assumptions of the CAPM model.
D) Investors recognize the CAPM is useless for individual investors.

Question

Quizplus · Accepted Answer

Investors understand that while some assumptions of the Capital Asset Pricing Model (CAPM) may seem unrealistic, not all of them are. The model is still widely used in finance to estimate a portfolio's expected return based on its risk, and to price securities.

Which of the Following Regarding Investors and the CAPM Is