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) The 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.
E) They pay no taxes or transactions costs.

Question

Quizplus · Accepted Answer

Myopic behavior means that investors plan for one identical holding period, without considering potential changes in their investment strategy or holding period in the future. This is a key assumption of the CAPM, as it simplifies the model and allows for the estimation of expected returns based on investors' short-term expectations.

One of the Assumptions of the CAPM Is That Investors