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Discuss the Similarities and the Differences Between the CAPM and the APT

question 79

Essay

Discuss the similarities and the differences between the CAPM and the APT with regard to the following factors: capital market equilibrium, assumptions about risk aversion, risk-return dominance, and the number of investors required to restore equilibrium.


Definitions:

Equal Variances T-Test

A statistical test used to determine if two populations have equal variances, assuming that the populations are normally distributed and independent.

Completely Randomized Design

A research design in which subjects are randomly assigned to experimental groups in an entirely unsystematic way, ensuring each subject has an equal chance of being assigned to any group.

Partial ANOVA Table

An abbreviated table used in Analysis of Variance (ANOVA) that displays some but not all of the information related to the statistical test.

Experimental Units

The smallest unit of experiment which is independently assigned to a treatment group.

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