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On the Validity of the Capital Asset Pricing Model (CAPM)

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  • M. J. Alhabeeb

Abstract

This study exposes the meaning and role of the Capital Asset Pricing Model (CAPM) and lays out the key elements that make it work. It shows the model’s theoretical strength and examines its applicability and validity as a technical tool to measure the expected return to the investment in stock, along with assessing the market risk associated with that investment.

Suggested Citation

  • M. J. Alhabeeb, 2020. "On the Validity of the Capital Asset Pricing Model (CAPM)," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 12(4), pages 1-1, December.
    • Handle: RePEc:ibn:ijmsjn:v:12:y:2020:i:4:p:1
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    References listed on IDEAS

    as
    1. Merton, Robert C, 1987. "A Simple Model of Capital Market Equilibrium with Incomplete Information," Journal of Finance, American Finance Association, vol. 42(3), pages 483-510, July.
    2. Merton, Robert C, 1973. "An Intertemporal Capital Asset Pricing Model," Econometrica, Econometric Society, vol. 41(5), pages 867-887, September.
    3. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    4. André F. Perold, 2004. "The Capital Asset Pricing Model," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 3-24, Summer.
    5. Black, Fischer, 1972. "Capital Market Equilibrium with Restricted Borrowing," The Journal of Business, University of Chicago Press, vol. 45(3), pages 444-455, July.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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