International Asset Pricing Model

(redirected from IAPM)
Also found in: Acronyms.

International Asset Pricing Model (IAPM)

The international version of the CAPM assuming that investors in each country share the same consumption basket and purchasing power parity holds.

International Asset Pricing Model

A version of the Capital Asset Pricing Model applied to international investments. Like the CAPM, it attempts to describe the relationship between the risk and the expected return on an investment, which is used to determine an investment's appropriate price. The assumption behind the CAPM is that money has two values: a time value and a risk value. Thus, any risky asset or investment must compensate the investor for both the time spent with his/her money tied up in the investment and the investment's relative riskiness. This compensation must be in addition to the risk-free rate of return. It is important to note that in addition to these factors (which the CAPM and the IAPM hold in common), the IAPM assumes that purchasing power parity holds true in the countries it is investigating.
References in periodicals archive ?
Future rotations of USARCENT staff, IAPMs, IAMs, along with the supporting signal commands will assume the responsibility of helping the USARCENT Commander and DAA conduct informed risk management and risk acceptance for his network enclaves.
18) Fernandes (2003) uses monthly information to implement a similar IAPM.
Following Foerster and Karolyi (1999), 24 months of information around the cross-listing event (12 months before and after the cross listing week) is used to estimate the IAPM coefficients.
Section III derives an intertemporal IAPM with PPP deviations, demonstrates how to translate risk and the price of risk into any nominal or real numeraire using the model's state variables, and identifies testable restrictions not found in the domestic APM.
This characteristic and the assumptions stated in section II permit application of Ross's [1976] APT, and the derivation of an IAPM in nominal country 0 terms.
One of the many issues that the IAPM can be used to analyze is the forward exchange market's risk premium.
Every meeting of the Annual Conference of IAPM Conference (APCON) should have at least one day dedicated to the meeting along with faculty involved in the training programs and representatives from the postgraduate residents.