A form of the
capital asset pricing model that includes
macroeconomic risks left out in other versions of the CAPM. These macroeconomic variables are called factors, and are included as the model calculates prices of
portfolios. Proponents claim that the multifactor CAPM better accounts for
systemic risks and fits data better, while critics contend that the model does not calculate the relative
riskiness of each factor compared to other factors.