n NISM Certifications
XXI NISM Series XXI-A
Medium

The Capital Asset Pricing Model (CAPM) assumes which of the following?

Practice question from NISM XXI A for PMS - Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Investors have heterogeneous expectations and unlimited access to information

  2. B

    Markets are perfectly efficient and investors are rational

  3. C

    Investors can borrow and lend at the risk-free rate without restrictions

  4. Both B and C are correct

    Correct answer

Why this is the answer

CAPM assumes market efficiency, rational investors, and the ability to borrow/lend at the risk-free rate.

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