Comparision of CAPM and APT

Essay specific features

 

Issue:

Business

 

Written by:

John W

 

Date added:

September 16, 2014

 

Level:

University

 

Grade:

B

 

No of pages / words:

32 / 8849

 

Was viewed:

3358 times

 

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Essay content:

Empirical tests in this study suggest that the relationships between ? and return in the ISM over the period January 1990 – June 2001 is weak, and the Capital Asset Pricing Model (CAPM) has poor overall explanatory power. The Arbitrage Pricing Theory (APT), which allows multiple sources of systematic risks to be taken into account, performs better than the CAPM, in all the tests considered...
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The Arbitrage Pricing Theory (APT), which allows multiple sources of systematic risks to be taken into account, performs better than the CAPM, in all the tests considered. Shares and portfolios in the ISM seem to be significantly influenced by a number of systematic forces and their behaviour can be explained only through the combined explanatory power of several factors or macroeconomic variables...
displayed 300 characters

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