To select: Reason of difference between arbitrage pricing model and capital pricing model. Introduction : Arbitrage pricing model used when there is no equilibrium in prices. There is more probability to gain profit in the market. Capital pricing model has a fixed price of the assets and establishes a relation between return and risk of the market.

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Chapter 10, Problem 5CP

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To select: Reason of difference between arbitrage pricing model and capital pricing model.

Introduction : Arbitrage pricing model used when there is no equilibrium in prices. There is more probability to gain profit in the market. Capital pricing model has a fixed price of the assets and establishes a relation between return and risk of the market.

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