CAPM Assumptions, True or False with explanation.
1. There are a large number of investors that are price takers (cannot influence prices)
2. All investors have the same beliefs about riskiness and expected returns of every asset (E(ri), σi, ρij)
3. All investors care only about mean and variance of their portfolios.
4. All investors care only about investments over a common single period
5. There are no trade frictions or taxes
6. All investors can borrow and lend at the risk free rate
7. All investors can short any stock (or any fraction of a stock) in the economy.