Do the professionals use any software programs that calculate both CAPM and Arbitrage Pricing Theory? If...
Do the professionals use any software programs that calculate both CAPM and Arbitrage Pricing Theory? If so... How much difference is there between the results and which result do the professionals consider to be more credible?
Homework Answers
Yes, professionals do use software programs to calculate both CAPM and arbitrage pricing theory. There are excel based software, simulation models, and statistical models that are used by professionals on a regular basis.
The difference between results is that the result of CAPM is based only on one factor and one beta while the arbitrage pricing theory is based on multiple factors and includes non-company factors as well. Professionals consider CAPM model to be more credible as in case of arbitrage pricing theory asset’s beta in relation to each separate factor is required and usually no insight is available as to what these factors could be. Hence in case of arbitrage pricing theory determination of relevant factors is required and this is not always easy to do and cannot always be objectively done. As such professionals consider CAPM model to be more credible.
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Do the professionals use any software programs that calculate
both CAPM and Arbitrage Pricing Theory? If...
3.1 (10 points) Describe the main assumptions of the Arbitrage Pricing Theory (APT) and contrast them...
3.1 (10 points) Describe the main assumptions of the Arbitrage Pricing Theory (APT) and contrast them with those of CAPM. Which set of assumptions is more restrictive? Define and the following concepts and explain the role played by them in the APT: (a) Well-diversified portfolio; (b) Risk-free arbitrage opportunity. 3.2 (10 points) Discuss how a simple one factor APT can be generalized to a multifactor version of the APT. What are the advantages and shortcomings of the multifactor APT? Discuss...
Consider a 3-factor Arbitrage Pricing Theory (APT) model. Assuming a risk-free rate of 4%, calculate the...
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Please answer Which of the following statements about the Arbitrage Pricing Theory (APT) are correct? Check...
Please answer
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Refer to the worksheet named SOFTWARE. This worksheet provides information about 2000 software programs (rows 2-2001,...
Refer to the worksheet named SOFTWARE. This worksheet provides
information about 2000 software programs (rows 2-2001, each row is
a different software program). Some rows are hidden to enable you
to see the first and last rows easily. Column A contains an ID
number for each software program. The remaining columns describe
each program in terms of lines of code (total, not per procedure),
number of users, and so on.
9. Considering all 2000 software programs in the data set...
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Do not use excell or any software. Use formulas/equations, and show
calculations. Thank you.
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3.1 (10 points) Describe the main assumptions of the Arbitrage Pricing Theory (APT) and contrast them with those of CAPM. Which set of assumptions is more restrictive? Define and the following concepts and explain the role played by them in the APT: (a) Well-diversified portfolio; (b) Risk-free arbitrage opportunity. 3.2 (10 points) Discuss how a simple one factor APT can be generalized to a multifactor version of the APT. What are the advantages and shortcomings of the multifactor APT? Discuss...
Please answer
Which of the following statements about the Arbitrage Pricing Theory (APT) are correct? Check all that apply The APT is more general than the Capital Asset Pricing Model (CAPM) The APT maintains that the realized return on any stock depends on changes unique to the firm. The APT model maintains that the realized returns on stocks depend on unexpected changes in fundamental economic factors The APT identifies all relevant factors that affect the realized returns on stocks Imani,...
Refer to the worksheet named SOFTWARE. This worksheet provides
information about 2000 software programs (rows 2-2001, each row is
a different software program). Some rows are hidden to enable you
to see the first and last rows easily. Column A contains an ID
number for each software program. The remaining columns describe
each program in terms of lines of code (total, not per procedure),
number of users, and so on.
9. Considering all 2000 software programs in the data set...
Problem 1 Please do not use any type of software to solve this problem; perform all the calculations and draw the charts by hand. You can use your calculator only for simple operations like addition, multiplication, finding averages and standard deviations. The owner of an apartment complex with three-bedroom units is trying to determine what rent he should set for the summer months. He believes that the rent of an apartment in his complex determines if it will be occupied...
Paternalism Paternalism in medicine isn't prima facie bad. We count on professionals to use their superior knowledge, experience, and relative objectivity to help us. The premise is, "you know more than I do; help me. The ideal scenario assumes collaboration between doctor and patient, where communication flows freely, where a doctor uses their expertise to guide patients' decisions. The complex nature of medical knowledge and its potential for life-altering impact (and expense) argue against any patient being able to order...
Do not use excell or any software. Use formulas/equations, and show
calculations. Thank you.
Question 122 points total). Your sister is starting to plan for your niece's college expenses and has asked for your advice. Elle has turned 6 years old today and she will start college when she is 18 years of age. Your sister plans to start saving today, by making a deposit of $5,000 into an account that earns 6% interest per year. Then, she will continue...
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