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a multivariate model for estimating the cost of equity capital, which incorporates several systematic risk factors.
http://www.nacva.com/association/A_bv_terms.html
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an equilibrium model of stock returns in which returns are specified to be a linear function of possibly many factors, in contrast to the Capital Asset Pricing Model (CAPM), in which returns are specified to be a linear function of one factor, the systematic (non-diversifiable) risk.
http://oldfraser.lexi.net/publications/books/gamble/glossary.html
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Arbitrage pricing theory (APT) holds that the expected return of a financial asset can be modelled as a linear function of various macro-economic factors, where sensitivity to changes in each factor is represented by a factor specific beta coefficient. The model derived rate of return will then be used to price the asset correctly - the asset price should equal the expected end of period price discounted at the rate implied by model. ...
http://en.wikipedia.org/wiki/Arbitrage_pricing_theory
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