... is a general equilibrium theory of asset pricing. It is a theoretical model that economists have built into their capital budgeting process. Several model classes can be identified in different economic and financial literatures. The intertemporal capital asset pricing model (ICAPM), the arbitrage pricing theories (APT), the consumption oriented capital asset pricing model (CCAPM). However, the more general models have provided much weaker than the CAPM when empirically tested.(Luigi Buzzacchi, Luca L.Ghezzi) The importance of CAPM is that was the first apparently successful attempt to show how to access the risk of the cash flow, from a potential investment project and to estimate the projects cost of capital, and the expected rate of return the investors would demand if they choose or decide to invest in the project. Until recently a vast majority of researches were supportive of this model and they presented empirical data to support this model.This model ...

See this essay or coursework document in full right now