According to capital asset pricing model assumptions, quantities of all assets are_
Answers
The CAPM is a model for pricing an individual security or portfolio. For individual securities, we make use of the security market line (SML) and its relation to expected return and systematic risk (beta) to show how the market must price individual securities in relation to their security risk class.
Explanation:
Assumptions of Capital Asset Pricing Model
1. Risk-averse investors
2. Maximising the utility of terminal wealth
3. Choice on the basis of risk and return:
4. Similar expectations of risk and return
5. Identical time horizon
6. Free access to all available information
7. There is risk-free asset and there is no restriction on borrowing and lending at the risk free rate
8. There are no taxes and transaction costs
9. Total availability of assets is fixed and assets are marketable and divisible.
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