CAPM and APT:

a$.$ Briefly describe these two models: Capital Asset Pricing Model and Arbitrage Pricing

Theory? What are their main assumptions?

b$.$ CAPM and APT are so$-$called valuation models. In fact, they permit us to compute the

expected rate of return of a security. How can this be used to derive a current price?

c$.$ Contrast the two models. Are they compatible? Are they identical under certain

conditions?