What advantage of Capital Asset Pricing Model (CAPM) for find require rates of return & the disadvantage of Arbitrage Pricing Theory (APT)?
Perfer answer by english & thanks in advance for your guys help !
- myisland8132Lv 71 十年前最愛解答
Advantage of Capital Asset Pricing Model (CAPM)
1 It is simple and sensible:
• is built on modern portfolio theory
• distinguishes systematic risk and non-systematic risk
• provides a simple pricing model.
2 It is relatively easy to implement.
Disadvantage of Arbitrage Pricing Theory (APT)
1 Model itself does not say what the right factors are.
2 Factors can change over time.
3 Estimating multi-factor models requires more data.