![The empirical successes of [the three-factor model] suggest that it is an equilibrium pricing model, a three-factor version of Merton's (1973) intertemporal CAPM (ICAPM) or Ross's (1976) arbitrage pricing theory (APT). In this view, SMB and HML mimic combinations of two underlying risk factors or state variables of special hedging concern to investors. (Eugene Fama)](https://cdn.quotesdtb.com/img/quotes_images_webp/28/eugene-fama-apt-arbitrage-282928.webp)
The empirical successes of [the three-factor model] suggest that it is an equilibrium pricing model, a three-factor version of Merton's (1973) intertemporal CAPM (ICAPM) or Ross's (1976) arbitrage pricing theory (APT). In this view, SMB and HML mimic combinations of two underlying risk factors or state variables of special hedging concern to investors.
Eugene FamaRelated topics
apt arbitrage concern equilibrium hedging mimic model pricing risk special state theory underlying version view capm smbRelated quotes
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