Which of the Following Are Assumptions of the Simple CAPM

question 19

Multiple Choice

Which of the following are assumptions of the simple CAPM model?
I. Individual trades of investors do not affect a stock's price.
II. All investors plan for one identical holding period.
III. All investors analyze securities in the same way and share the same economic view of the world.
IV. All investors have the same level of risk aversion.

• A) I, II, and IV only
• B) I, II, and III only
• C) II, III, and IV only
• D) I, II, III, and IV

---

Definitions:

Gideon's Rule

A legal principle stemming from Gideon v. Wainwright (1963) that guarantees the right to free legal representation for defendants in criminal cases who cannot afford an attorney.

Fourteenth Amendment

An amendment to the U.S. Constitution, ratified in 1868, that guarantees equal protection under the law to all citizens.

Constitutional Limit

Restrictions and boundaries set by a constitution that determine the scope of powers and authority of government bodies and officials.

Bill of Rights

The first ten amendments to the United States Constitution, guaranteeing essential rights and freedoms to American citizens.