... so when given a choice between two portfolio with identical expected standard deviation, they will choose the one with the higher expected return. 3. Investor are risk-averse, so when given a choice between two portfolio with identical expected return. they will choose the one with the lower standard deviation 4. Individual assets are infinitely divisible , meaning that an investor can buy a fraction of a share if he or she so desire . 5. Investor may either lend or borrow money at the same risk free rate . 6. No taxes or transaction costs. 7. Investor have same one-period horizon. 8. Information can be transmit to all investor freely and instantly . 9. Investors have same expected returns, standard deviation, and covariance of securities The CAPM becomes an extreme case by made these assumptions. All investors have same information and prospectors for the securities. There are no friction to impede investing, security market is an perfect ...

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