LOS d: Justify the extension of the domestic CAPM to an international context (the extended CAPM) and describe the assumptions needed to make the extension.
Which of the following assumptions is NOT needed to justify the extended capital asset pricing model?
A) |
World markets are integrated (i.e. no segmentation). | |
B) |
Investors throughout the world have identical consumption baskets. | |
C) |
The rate of inflation must be identical throughout the world. | |
The rate of inflation need not be identical throughout the world. In a world where identical consumption baskets exist and where purchasing power parity holds exactly at any point in time, exchange rate changes would mirror inflation differences between any two countries.
[此贴子已经被作者于2010-4-15 21:30:31编辑过] |