Purchase Solution

Investor Behavior

Not what you're looking for?

Ask Custom Question

Which assumptions regarding investor behavior are required by the CAPM?
1. Investors try to maximize their wealth
2. Investors consider only risk when making investments
3. Investors are risk averse
4. Investors adopt a long-term perspective

Purchase this Solution
Solution Summary

This solution provides the correct answer with explanation to the CAPM multiple choice question listed.

Solution Preview

The CAPM formula = risk free rate + (beta x (required return - risk free rate)

Answer: 1 and 4

The ...

Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

View More Free Quizzes
Related BrainMass Solutions

  • Why don't all firms pay dividends? Should they?

    Discuss the factors that may drive this decision for an investor. 2. Explain whether or not you would recommend this behavior. Two paragraphs. 1.

  • “Behavioral Finance at JPMorgan” Case Analysis

    This is similar to investing behavior, where an investor may liquidate their shares after they have risen in various trading sessions and the investor thinks that it may not rise any more since it is less likely to continue rising, or incases where the

  • Investment Considerations

    As such, they are following the primary rule of finance which is self interested behavior. This behavior dictates that any investor's primary goal is capital appreciation - capital gain over some period of time.

  • Company Code of Conduct and Employee Behavior

    The investor would likely value the code of ethics higher than the public, as the investor has a financial stake in the company and more to lose, when compared to the typical customer/public.

  • Risk Reward Behavior and Stock Portfolio Diversification

    281002 Risk Reward Behavior and Stock Portfolio Diversification You are a risk-averse investor who is considering investing of two economies. The expected return and volatility of stocks in both economies is the same.

  • China RMB currency

    There are complex questions that are related to global investor behavior, the qualitative research makes it possible to examine these issues objectively.

  • Risk and Return Tradeoff Memo

    Investment strategy is a set of plans, pattern in behavior or actions, procedures followed to make investment decisions for a particular investor.

  • Unethical behavior in finance

    Would you advise a potential investor to exercise a call option or a put option? Explain. Why is ethical behavior so critical to the practice of finance? I think that these two are inseparable.

  • Corporation and Ethics

    Thus Ethical behavior is priced in the market. Thus the corporate form of ownership encourages ethical behavior. Corporate form of ownership and ethical behavior, and responsibilities of a corporation are discussed.

View More Related Solutions