Consider the statement: “If we can identify a portfolio that beats the S&P 500 Index portfolio,


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FIN 451 Topic 6 Discussions GCU

FIN 451 Topic 6 DQ 1

Consider the statement: “If we can identify a portfolio that beats the S&P 500 Index portfolio, then we should reject the single-index CAPM.” Do you agree or disagree? Justify your arguments.

FIN 451 Topic 6 DQ 2

Describe the underlying assumptions and differences for the Capital Asset Pricing Model (CAPM) and the Arbitrage Pricing Theory (APT). Provide an example in which type of situation each would be most appropriate to the task. Is there any situation in which using either method would be acceptable? Or neither, and if so, which pricing model would then be most appropriate? Explain.




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