Do the CAPM assumptions include this: ‘the markets for assets are perfectly competitive’ . I see it in Schweser, I don’t see it in the CFAI texts. any thoughts? any assistance pleeeeeease?
On the one hand - who knows? I’ve read billions of assumptions that are “necessary” for CAPM. On the other hand, I’ve read that one a lot. I’d go with it.
yes, that is an assumption of the capm. but if it’s not in the book, they probably won’t test it. but if they ask it, now you know. schweser is never wrong. (i’m kidding, if you’re really paranoid, check the errata, but it’s an assumption.)
What’s a competitive market, anyways? I’ve heard of efficient markets but competitive?
main point of a competitive markets is that not one producer or consumer can influence market prices. I think the point here is efficient markets.