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The most significant conceptual difference between the arbitrage pricing theory (i.e. APT or factor model) and the capital asset pricing model (CAPM) is that APT

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The most significant conceptual difference between the arbitrage pricing theory (i.e. APT or factor model) and the capital asset pricing model (CAPM) is that APT ignores residuals in a multi-factor form of the model suggests that all stock returns are perfectly predictable if you know Beta coefficient does not consider stock sensitive to the market risk recognizes that there can be firm specific risk factors

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