If you are using APT (Arbitrage Pricing Theory) to predict the expected return o
ID: 2751000 • Letter: I
Question
If you are using APT (Arbitrage Pricing Theory) to predict the expected return of Stock APPLE, what kind of information or variable will you add into the model? Can anyone help me with this?
Percentage of Portfolio
Units
Base Unit Cost
Holdings Price Base
Base Cost
Base Market Value
Base Investment Gain/Loss
Total Account Market Value
7.18
100.0000
94.050000
210.580000
9,405.00
21,058.00
11,653.00
293,440.69
Percentage of Portfolio
Units
Base Unit Cost
Holdings Price Base
Base Cost
Base Market Value
Base Investment Gain/Loss
Total Account Market Value
7.18
100.0000
94.050000
210.580000
9,405.00
21,058.00
11,653.00
293,440.69
Explanation / Answer
An asset pricing model based on the idea that an asset's returns can be predicted using the relationship between that same asset and many common risk factors.
In order to predict expected return on Apple's stock, we will be requiring other generally used factor which usually have high correlation with the stock price variation such as
These factors are needed as there is variation of 153 units in the Total Acc. Market Value as shown below when calculated using Apple Stock which can be attributed to these factors or constant.
However we will require a large sample of the above mentioned factors & Apple Stock Variation to calculated the dependency factor Beta.
Percentage of Portfolio
Units
Base Unit Cost
Holdings Price Base
Base Cost
Base Market Value
Base Investment Gain/Loss
Total Account Market Value
Total Account Market Value using Apple stock percentage
Difference
7.18
100
94.05
210.58
9,405.00
21,058.00
11,653.00
2,93,440.69
2,93,286.91
153.78
Total Base Mrkt. Val. / Perct. Of portforlio
Percentage of Portfolio
Units
Base Unit Cost
Holdings Price Base
Base Cost
Base Market Value
Base Investment Gain/Loss
Total Account Market Value
Total Account Market Value using Apple stock percentage
Difference
7.18
100
94.05
210.58
9,405.00
21,058.00
11,653.00
2,93,440.69
2,93,286.91
153.78
Total Base Mrkt. Val. / Perct. Of portforlio
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.