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.
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. http://www.youtube.com/watch?v=-0EgQ97whWg