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Research on the Application of CAPM Model in Investment

In: Proceedings of the 8th International Conference on Financial Innovation and Economic Development (ICFIED 2023)

Author

Listed:
  • Yuchen Gao

    (State University of New York at Stony Brook)

Abstract

Capital Asset Pricing Model (CAPM) is one of the most important theories in modern finance. As a simple, intuitive risk premium model, The CAPM was primarily developed to study the relationship between expected returns on assets and risk assets in the securities market. Scholars have conducted a lot of empirical research on the applicability of this model in the capital market. CAPM has been proven to be somewhat defective, but it is still widely accepted and recognized and broadly applied in research. In this paper, two representative individual stocks in the U.S. retail industry, namely Amazon.com, Inc. and Costco Wholesale Corporation, are used as examples and the indices of the two stocks from 2017 to 2021 as samples. CAPM is used to conduct regressive analysis and the level of its risk is judged so as to provide investment suggestions and countermeasures.

Suggested Citation

  • Yuchen Gao, 2023. "Research on the Application of CAPM Model in Investment," Advances in Economics, Business and Management Research, in: Yushi Jiang & Guangming Li & Wilson Xinbao Li (ed.), Proceedings of the 8th International Conference on Financial Innovation and Economic Development (ICFIED 2023), pages 140-146, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-142-5_15
    DOI: 10.2991/978-94-6463-142-5_15
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