What does it mean when the CAPM is called "robust?"
A) The CAPM requires no assumptions.
B) Even if the CAPM's major assumptions are relaxed, most of its conclusions still hold.
C) The CAPM is based on realistic assumptions.
D) No other model can represent stock returns better than the CAPM.

Question

Quizplus · Accepted Answer

The CAPM is considered "robust" because its conclusions about the relationship between risk and return generally hold true even when some of its assumptions are relaxed.

What Does It Mean When the CAPM Is Called "Robust