Multiple Beta Model
The arbitrage pricing theory (APT) has multiple betas in its model. In contrast to the CAPM that has only one risk factor, namely the overall market, APT has multiple risk factors. Each risk factor has a corresponding beta indicating the responsiveness of the asset being priced to that risk factor.
Multiple-factor models contradict CAPM by claiming that some other factors can influence return, therefore one may find two stocks (or funds) with equal beta, but one may be a better investment.
Read more about this topic: Beta (finance)
Famous quotes containing the words multiple and/or model:
“... the generation of the 20’s was truly secular in that it still knew its theology and its varieties of religious experience. We are post-secular, inventing new faiths, without any sense of organizing truths. The truths we accept are so multiple that honesty becomes little more than a strategy by which you manage your tendencies toward duplicity.”
—Ann Douglas (b. 1942)
“Socrates, who was a perfect model in all great qualities, ... hit on a body and face so ugly and so incongruous with the beauty of his soul, he who was so madly in love with beauty.”
—Michel de Montaigne (1533–1592)