The CAPM assumes an investor will choose a portfolio with
A) the largest expected return
B) the largest expected return for a given level of risk.
C) the smallest risk.
D) the largest expected return and the largest risk.

Question

Quizplus · Accepted Answer

The CAPM assumes that investors choose a portfolio that offers the largest expected return for a given level of risk. This means that investors aim to optimize their returns while taking into consideration the amount of risk they are willing to undertake. Therefore, the correct answer is B - the largest expected return for a given level of risk.

The CAPM Assumes an Investor Will Choose a Portfolio with