Comparison between capm and apt pdf

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is the beta of asset i with respect to the market portfolio. This is the CAPM: • βiM gives a measure of asset i's systematic risk. • ¯rM − rF gives the premium The APT emphasizes the role of the co-variance between asset returns and the exogenous factors, while the CAPM stresses on the co-variance between asset returnsThe choice of factors is often not constant across assets or over time for APT, whilst CAPM contains the same single factor every time. 3. Empirical Accuracy A Comparison of CAPM & Arbitrage Pricing Theory Arbitrage pricing theory (APT), in Finance, is a general theory of asset pricing, that has become