Arbitrage Pricing Theory (APT)
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.
Nearby TermsArbitrage Arbitrage bonds Arbitrage Pricing Theory (APT) Arbitrage Trading Program (ATP) Arbitrage-free option-pricing models
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University