Relevance of Capital Market Theory: David Nawrocki
1.<Tab/>The old theory of CAPM makes the assumption that the CAPM line represents a long term model of assets fluctuations and risks versus returns. However, it is shown that the historical data does not take into consideration influential changes in the economy such as new technology. Therefore, from year to year, data can considerably change. The new CAPM theory has evolved to make different assumptions. First, CAPM states that investors have homogenous expectations and investments horizons. …
