Mcq arbitrage pricing theiry

This theory was created in by the economist, Stephen Ross. The theory aims to pinpoint the fair market price of a security that may be temporarily mispriced. The theory assumes that market action is less than always perfectly efficient, and therefore occasionally results in assets being mispriced — either overvalued or undervalued — for a brief period of time. However, market action should eventually correct the situation, moving price back to its fair market value.

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