The straightforward generalization of the simple CAPM to international stocks is problematic because

The straightforward generalization of the simple CAPM to international stocks is problematic because

inflation$-$risk perceptions by different investors in different countries will differ as consumption baskets differ.

investors in different countries view exchange$-$rate risk from the perspective of different domestic currencies.

taxes, transaction costs, and capital barriers across countries make it difficult for investors to hold a world$-$index portfolio.

All of the options are correct.

None of the options are correct.