The CAPM Does Not Require Investors Have Homogeneous Expectations,but Rather

question 72

Multiple Choice

The CAPM does not require investors have homogeneous expectations,but rather that they have:

• A)rational biases.
• B)no biases.
• C)heterogenous expectations.
• D)rational expectations.

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Definitions:

IOU Instrument

A document acknowledging a debt or an obligation to pay a specified sum of money to another party.

Payable On Demand

A financial agreement or instrument that requires payment when requested by the holder.

Unconditional Promise

A commitment made without any stipulations or requirements for its fulfillment.

Relative Permanence

The quality of a negotiable instrument that ensures its longevity.