Application and Thinking about Capital Asset Pricing Model

DOI

10.2991/978-94-6463-036-7_9How to use a DOI?

Keywords

Capital Asset Pricing Model (CAPM); Applications; Risk and Return; Capital Market

Abstract

In the mid-1960s, the equilibrium asset pricing theory, marked by Sharpe-Lintner-Mossin, was born. Because of its ability to clearly elucidate the relationship between the expected return on assets and risk, CAPM has been widely used in various aspects of portfolio-at-risk performance assessment, securities pricing, capital budgeting, and public utility stock management. After many years of development, the status of CAPM is unshakable in the capital market. However, while the CAPM model is supported by many scholars, it is also questioned because of its stringent assumptions. In this case, the paper introduces the defining formula and assumptions of the model and provides some exploration of the model in the capital market and other application scenarios. Then, the author discusses the limitations that the model may face in practical applications. Ultimately, in the current situation of the Chinese capital market, the author found that the applicability of the CAPM model in China is still limited for many reasons and deserves further study.

Copyright

© 2022 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Jianing Chen
PY  - 2022
DA  - 2022/12/31
TI  - Application and Thinking about Capital Asset Pricing Model
BT  - Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)
PB  - Atlantis Press
SP  - 52
EP  - 56
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-036-7_9
DO  - 10.2991/978-94-6463-036-7_9
ID  - Chen2022
ER  -