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1. Investors are rational and they choose among alternative portfolios on the basis of each portfolio's
expected return and standard deviation.
2. Investors are risk averse.
3. Investors maximise the utility of end of period wealth. Thus CAPM is a single period model.
4. Investors have homogeneous expectations with regard to asset return. Thus all investors will perceive
the same efficient set.
5. There exist a risk-free asset and all investors can borrow and lend at this rate.
6. All assets are marketable and perfectly divisible.
7. The capital market is efficient and perfect.
Judiesiz answered the question on August 16, 2018 at 23:02
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