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@Shreyes2010
Created December 26, 2011 15:03
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Similarly for APT the mathematical form is:
\begin{eqnarray*}
R_i &=& a_j + \beta_{j1} F_1 + \beta_{j2} F_2 + \dots + \beta_{jn} F_n + \epsilon_j \\
a_j &:& \mbox {constant for asset `j'}\\
F_k &:& \mbox{ are systemic factors}\\
\beta_{jk} &:& \mbox{ is the sensitivity of $j^{th}$ asset to factor `k'}\\
\epsilon_j &:& \mbox{risky asset's idiosyncratic random shock with mean zero}
\end{eqnarray*}
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