The Capital asset pricing model (CAPM) is a very useful model and it is used widely in the industry even though it is based on very strong assumptions. Discuss in the light of recent developments in the area.

The Capital asset pricing model (CAPM) is a very useful model and it is used widely in the industry even though it is based on very strong assumptions. Discuss in the light of recent developments in the area.

Useful references
Banz, R (1981) ‘The Relation between Return and Market Values of Common Stock’, Journal of Financial Economics, 9, 3-18

Berk, J.B (1995) ‘A Critique of Size Related Anomalies’, Review of Financial Studies, 8, 275-286

Fama, E & French, K (2002) ‘The Equity Premium’, Journal of Finance, 57, 637-659

Fama, E & Macbeth, J (1973) ‘Risk Return and Equilibrium: Some Empirical Tests’, Journal of Political Economy, 8, 607-636

Fama, E & French, K (1992) ‘The Cross Section Of Expected Stock Returns’, Journal of Finance, 47, 427-465

Fama, E & French, K (1993) ‘Common Risk Factors in the Returns on Stocks and Bonds’, Journal of Financial Economics, 33, 3-56

Graham, J & Harvey, C (2001) ‘The Theory And Practice Of Corporate Finance: Evidence From The Field’, Journal Of Financial Economics 60, 187-243

Kothari Et Al. (1995) ‘Another Look at the Cross Section Of Expected Stock Returns’, Journal of Finance, 50, 185-224

Roll, R (1977) ‘A Critique of the Asset Pricing Theory’s Test’, Journal of Financial Economics, 4, 129-176

Sharpe, W.F (1964) ‘Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk’, Journal of Finance 19, 425-442

 

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