Which of the Following Is a NOT an Assumption of the CAPM

question 45

Multiple Choice

Which of the following is a NOT an assumption of the CAPM?

• A) All investors have different expectations about expected returns, standard deviations, and correlation coefficients for all securities.
• B) All investors can borrow or lend money at the risk-free rate of return.
• C) There are no transaction costs.
• D) There are no personal income taxes so that investors are indifferent between capital gains and dividends.

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Definitions:

Variable-Interval

A reinforcement schedule where a reward is given after a random period has elapsed following a response.

Fixed-Ratio

A schedule of reinforcement where a response is rewarded only after a specified number of responses, in behaviorist psychology.

Variable-Ratio

A schedule of reinforcement where a response is reinforced after an unpredictable number of responses, making it highly effective in maintaining behavior after it has been learned.

Violence-Viewing Effect

The phenomenon where exposure to violent media can increase aggressive behavior and desensitize individuals to real-life violence.