APT: In contrast to the CAPM, the APT does not indicate which factors are expected to determine the risk premium of an asset. How can we determine which factors should be included?
APT: In contrast to the CAPM, the APT does not indicate which factors
are expected to determine the risk premium of an asset. How can we determine which factors should be included? For example, one risk factor suggested is the company size. Why might this be an important risk factor in an APT model?
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