Differentiating Bullish From Bearish Factors In The Arbitrage Pricing Theory

Joseph M. Cheng
2010 American Journal of Business Education  
<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="color: black; font-size: 10pt;"><span style="font-family: Times New Roman;">This is a teaching note on a proposed approach that will correct a common flaw in the way the return-generating process within the APT framework is illustrated in textbooks.<span style="mso-spacerun: yes;">&nbsp; </span>The problem can be resolved by dichotomizing the risk factors into two kinds.<span
more » ... acerun: yes;">&nbsp; </span>Based on this approach, the author eliminated the main source of confusion and developed an alternative way to teaching this important financial theory in a comprehensive and intuitive manner.</span></span></p>
doi:10.19030/ajbe.v3i9.475 fatcat:nrz4rzrxqjcpjb74jsm4jpr55y