- investors are risk averse
- all investors have uniform expectations of risk and return on all assets
- all investors hold some combination of a risk-free asset and the market portfolio
Differences
- market portfolio
- domestic CAPM: all domestic assets
- international CAPM: constructed out of the global universe of risky assets
- currency hedging
- domestic CAPM: N/A
- international CAPM: ICAPM breaks down if currency hedging is not available as a result of physical or legal restrictions on such activities.
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