Exploring Asset Pricing Models

This chapter analyzes the evolution and limitations of asset pricing models, focusing on the Capital Asset Pricing Model (CAPM) and the challenges it faces in practical applications. It discusses the rise of behavioral finance as an alternative to traditional models while emphasizing the need for simpler, more effective approaches to understanding market behavior. Additionally, the chapter highlights the impact of unpredictable market events, such as Black Swan occurrences, which current models often overlook.