article – Arbitrage Pricing Theory

article - Arbitrage Pricing Theory
article – Arbitrage Pricing Theory

article – Arbitrage Pricing Theory

Arbitrage refers to riskless profits that are generated not because of a net investment but on account of exploiting the difference that exists in the price of identical financial instruments due to market imperfections. Eventually, these arbitrage opportunities are eliminated and supply becomes equal to demand.

Thus, the innate tendency for the price of a security to change is dispelled once the market is in equilibrium.

The aim of any investor is to maximize returns for a given level of risk or to minimize the risk for the given return.

Risks can be broadly classified as systematic or unsystematic.

Unsystematic risk is firm-specific and can be eliminated by holding

a diversified portfolio while systematic risk refers to market risk that can at best be mitigated by hedging. Hence, the market rewards an investor for undertaking systematic risk

  • pic1 عنوان مقاله : Arbitrage Pricing Theory
  • pic2 نوع فایل : PDF
  • pic2 حجم فایل : 35 کیلوبایت
  • pic4 دانلود فایل

ارسال دیدگاه

آدرس ایمیل شما منتشر نخواهد شد. فیلد های ضروری با * مشخص شده است. *