which is better capm or apt

Discussion in 'Economics' started by morganist, Nov 28, 2009.

  1. which is better capm or apt.
  2. Zzzzzzz. I'm sorry couldn't help myself, my eyes glaze over.:D
  3. seriously i need an answer i am working on a new security and i need a way to summarize risk on an individual level to then relate it to pooled securities. thus i can work out the value in relation to other securities in the group.

    so i need to know which is better. i am leaning towards a five factor model based on apt but want input.
  4. APT of course has a lot more flexibility. You can make APT replicate CAPM (just by using only a beta factor), so I say APT > CAPM.

    Here is a good intro to it.