Year: 2024
Type: article
Abstract: In the financial field, asset pricing models are crucial for investment decisions and enterprise value assessment. This article compares and studies two common asset pricing models, CAPM and DVM. There are differences in parameter estimation and assumptions between the two models. The CAPM offers a theoretical derivation of the relationship between required returns and systemic risk by precisely accounting for a firm's level of systemic risk relative to the entire stock market. However, the assumptions of this model are unrealistic, and the accuracy of variable values cannot be accurately grasped. The calculation process for DVM's conclusion is concise and applicable to most companies. Nevertheless, the input data used in the calculation process may not be accurate. At the same time, it ignores the growth of future returns, ignoring explicitly include risks, and is not applicable to companies that distribute zero dividends. This study is beneficial for providing investors and enterprises with a more comprehensive basis for selecting pricing models, and promoting the development of financial theory and practice.
Author: Qianye Hao
Institution: China Jiliang University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4402952178