arbitrage pricing theory
Arbitrage pricing theory is a financial theory that attempts to explain the relationship between the expected return of an asset and its risk by considering a broader set of factors or variables than just the asset's beta. It suggests that the price of an asset is determined by a combination of multiple risk factors, and investors can exploit mispricings or discrepancies in these factors to earn risk-free profits through a strategy called arbitrage.
Requires login.
Related Concepts (1)
Similar Concepts
- arbitrage opportunities
- commodity arbitrage
- convergence arbitrage
- currency arbitrage
- equity arbitrage
- index arbitrage
- interest rate arbitrage
- risk arbitrage
- spatial arbitrage
- statistical arbitrage
- statistical arbitrage models
- statistical arbitrage strategies
- tax arbitrage
- triangular arbitrage
- volatility arbitrage