Question:

Which of the following assumptions is common between the pricing models of CAPM and APT?

A.

A single period investment horizon

B.

The investors can freely borrow and lend at risk-free rate

C.

The investors select portfolios based on expected mean and variance of return

D.

Investors have homogeneous expectations and are expected-utility-of-wealth maximizers.

Answer» d. Investors have homogeneous expectations and are expected-utility-of-wealth maximizers.