Arbitrage Pricing Theory - APT
An alternative to the CAPM, APT differs in its assumptions and explanation of risk factors associated with the risk of an asset.
Investopedia Commentary
This is a relatively new theory that predicts a relationship between the returns of portfolio and the returns of a single asset through a linear combination of variables. Sometimes market theories can be as confusing as calculus.
Related Links
Financial Concepts
The Equity Risk Premium - Part 1
The Equity Risk Premium - Part 2
Also spelled: APT
arbitrage pricing theory