Which of the following statements is false?
A) Investors may have different information regarding expected returns, correlations, and volatilities, but they correctly interpret that information and the information contained in market prices and they adjust their estimates of expected returns in a rational way.
B) Investors may learn different information through their own research and observations, but as long as they understand the differences in information and learn from other investors by observing prices, the CAPM conclusions still stand.
C) Every investor, regardless of how much information he has access to, can guarantee himself an alpha of zero by holding the market portfolio.
D) The CAPM requires making the strong assumptions of homogeneous expectations.
Download Full Solution
If you are here for the first time, you can request for a discount coupon, which can knock off upto 20% of the quoted price on any service.