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:

Economic Profit

Profit calculated by subtracting both visible and hidden costs from total revenue, offering insight into the true financial gain of a business endeavor.

Marginal Revenue

The additional income received from selling one extra unit of a product or service.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Profit-Maximizing

A strategy firms adopt aiming to produce the quantity of goods or services that leads to the highest possible profit.