Comparison of CAPM and APT

Zixin Wang ()
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Zixin Wang: The University of Edinburgh, School of Economics

A chapter in Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024), 2025, pp 345-353 from Springer

Abstract: Abstract The literature comparing Capital Assets Pricing Model (CAPM) and Arbitrage Pricing Theory (APT) is gradually increasing as more and more scholars are paying attention to CAPM and APT to illustrate the relationship between return and risk. However, there are few literature reviews in this area. This study aims to review these articles from both national and industry perspectives. The author conducted a literature search through websites such as Web of Science, Google Scholar, and selected 18 articles. In this study, the comparison between the two models is specified into five aspects: aspects compared between APT and CAPM, the method used in comparing, and so on. Based on this logic, the literature is analyzed and compared. Eventually, through this literature review, it is found that the countries and industries selected for the comparison between CAPM and APT were relatively single. This study provides solutions to these problems and suggestions for future research directions.

Keywords: Capital Assets Pricing Model (CAPM); Arbitrage Pricing Theory (APT); Compare Analysis; Literature Review (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-652-9_35

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DOI: 10.2991/978-94-6463-652-9_35

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