ments . ▁ ▁Are ▁price ▁tak ers , ▁i . e ., ▁they ▁cannot ▁influence ▁prices . ▁ ▁Can ▁l end ▁and ▁borrow ▁un limited ▁amounts ▁under ▁the ▁risk ▁free ▁rate ▁of ▁interest . ▁ ▁Trade ▁without ▁transaction ▁or ▁tax ation ▁costs . ▁ ▁De al ▁with ▁se cur ities ▁that ▁are ▁all ▁highly ▁divis ible ▁into ▁small ▁parc els ▁( All ▁assets ▁are ▁perfectly ▁divis ible ▁and ▁liquid ). ▁ ▁Have ▁hom ogeneous ▁expect ations . ▁ ▁Assume ▁all ▁information ▁is ▁available ▁at ▁the ▁same ▁time ▁to ▁all ▁invest ors . ▁ ▁Problem s ▁ ▁In ▁their ▁ 2 0 0 4 ▁review , ▁econom ists ▁Eug ene ▁F ama ▁and ▁Kenneth ▁French ▁argue ▁that ▁" the ▁failure ▁of ▁the ▁C AP M ▁in ▁empir ical ▁tests ▁implies ▁that ▁most ▁applications ▁of ▁the ▁model ▁are ▁invalid ". ▁▁ ▁The ▁traditional ▁C AP M ▁using ▁historical ▁data ▁as ▁the ▁inputs ▁to ▁solve ▁for ▁a ▁future ▁return ▁of ▁asset ▁i . ▁However , ▁the ▁history ▁may ▁not ▁be ▁sufficient ▁to ▁use ▁for ▁predict ing ▁the ▁future ▁and ▁modern ▁C AP M ▁approaches ▁have ▁used ▁bet as ▁that ▁rely ▁on ▁future ▁risk ▁estimates . ▁ ▁Most ▁pract ition ers ▁and ▁academ ics ▁agree ▁that ▁risk ▁is ▁of ▁a ▁varying ▁nature ▁( non - constant ). ▁A ▁critique ▁of ▁the ▁traditional ▁C AP M ▁is ▁that ▁the ▁risk ▁measure ▁used ▁remains ▁constant ▁( non - v ary ing ▁beta ). ▁Rec ent ▁research ▁has ▁empir ically ▁tested ▁time - v ary ing ▁bet as ▁to ▁improve