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Investing Glossary:
Arbitrage Pricing Theory (APT)
Copyright 2009,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| Term: |
| Arbitrage Pricing Theory (APT)
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| Definition: |
| An alternative model to the capital Asset pricing model developed by Stephen Ross and based purely on Arbitrage arguments. The APT implies that there are multiple Risk factors that need to be taken into Account when calculating risk-adjusted performance or alpha.
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