One of the Assumptions of the CAPM Is That Investors

question 27

Multiple Choice

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)They 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.

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Definitions:

Reinforcers

Stimuli that increase the likelihood of a behavior being repeated, can be positive (adding something desirable) or negative (removing something undesirable).

Learning Sets

The capability to learn more efficiently and effectively based on the experiences gained from solving previous problems.

Insight Learning

A form of cognitive learning where problem-solving occurs through a sudden understanding or epiphany rather than by trial and error.

Law of Effect

A psychological principle suggesting that behaviors followed by favorable consequences become more likely, and behaviors followed by unfavorable consequences become less likely.