CAPM and Multi-factor Models

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Beta (β) measures the volatility of a stock in relation to a market such as S&P 500 or any other ind...

The Capital Asset Pricing Model is a popular asset pricing model in Finance. It is used to determine...

The securities Market Line (SML) is a graphical representation of the Capital Asset Pricing Model (C...

While deciding on about what investments to make, one should weigh the rewards versus the risks of t...

In a business context, [Sharpe ratios](https://financetrain.com/sharpe-ratio-for-measuring-return-on...

Jensen’s Alpha, also known as the Jensen’s Performance Index, is a measure of the excess returns ear...

The Single Index Model (SIM) is an asset pricing model, according to which the returns on a security...

The risk arising from the volatility in the stock prices is referred to as Equity Price Risk. While...

We had seen earlier that CAPM, which is essentially a Single Index Model, considers that the returns...