Yes, The APT Is Testable

The Journal of Finance ()
Get full text at journal


The Arbitrage Pricing Theory (APT) has been proposed as an alternative to the mean-variance Capital Asset Pricing Model (CAPM). This paper considers the testability of the APT and points out the irrelevance for testing of the approximation error. We refute Shanken's objections, including his assertion that Roll's critique of the CAPM is applicable to the APT. We also explain the testability of the APT on subsets, and we explore the relationship between the APT and the CAPM. [ABSTRACT FROM AUTHOR]

Cite this document (BETA)

Readership Statistics

35 Readers on Mendeley
by Discipline
46% Business, Management and Accounting
46% Economics, Econometrics and Finance
9% Social Sciences
by Academic Status
46% Student > Ph. D. Student
23% Professor > Associate Professor
9% Researcher
by Country
3% Switzerland
3% India
3% Thailand

Sign up today - FREE

Mendeley saves you time finding and organizing research. Learn more

  • All your research in one place
  • Add and import papers easily
  • Access it anywhere, anytime

Start using Mendeley in seconds!

Sign up & Download

Already have an account? Sign in