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arbitrage pricing theory

   Also found in: Acronyms, Wikipedia 0.04 sec.
Arbitrage Pricing Theory (APT)
An alternative model to the capital asset pricing model developed by Stephen Ross and based purely on arbitrage arguments. The APT implies that there are multiple risk factors that need to be taken into account when calculating risk-adjusted performance or alpha.
arbitrage pricing theory
A mathematical theory for explaining security values that holds that the return on an investment is a function of the investment's sensitivity to various common risk factors such as inflation and unemployment.


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Several studies have utilized the Capital Asset Pricing Model (CAPM) and the Arbitrage Pricing Theory (APT) theoretical models to explain the role of macrofinance factors in determining asset prices [see, for example, Dusak (1973), Black (1976), Ross (1976), and Darrat and Brocato (1994)].
Futures market efficiency and the federal budget deficit by Haddad, Amin M. / Journal of Academy of Business and Economics
He is probably best known for having invented the Arbitrage Pricing Theory and the Theory of Agency, and as the co-discoverer of risk neutral pricing and of the binomial model for pricing derivatives.
Twelve Investment Industry Leaders Honored By Association For ... by Business Wire
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