A limitation of the CAPM is the assumption that ________.
A) there are multiple sources of systematic risk
B) there is a single source of systematic risk
C) investors have different assessments of expected returns and standard deviations
D) they cannot borrow freely at the risk-free rate

Question

Quizplus · Accepted Answer

The CAPM assumes that there is only one source of systematic risk, which is the market portfolio. This is a simplifying assumption that may not hold true in reality, as there may be multiple sources of systematic risk that affect asset prices.

A Limitation of the CAPM Is the Assumption That ________