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- Title
The CAPM: Theoretical Validity, Empirical Intractability and Practical Applications.
- Authors
Brown, Philip; Walter, Terry
- Abstract
The authors discuss and evaluate the capital asset pricing model (CAPM) of investment market analysis, arguing that despite possible empirical evidence against the CAPM, investors continue to value risk premiums and the CAPM will continue to be used. Topics include diversification as a risk reduction strategy in investments, the portfolio theory of the economist Harry Markowitz, covariance and variance risk, and attempts to test asset pricing theories. The uses of the CAPM in corporate finance teaching, price setting, beta measurements, and capital budgeting are mentioned.
- Subjects
CAPITAL assets pricing model; INVESTMENT policy; MARKOWITZ, Harry M., 1927-; PORTFOLIO diversification; MATHEMATICAL models of finance; BETA (Finance); CAPITAL budget; CORPORATE finance; EDUCATION
- Publication
Abacus, 2013, Vol 49, p44
- ISSN
0001-3072
- Publication type
Article
- DOI
10.1111/j.1467-6281.2012.00383.x