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The Capital Asset Pricing Model (CAPM) is a key financial tool used to estimate the relationship between asset return and risk, helping investors make investment decisions, business valuation and risk management. The importance of CAPM is reflected in its ability to help investors understand market risk, build an optimized portfolio, estimate the cost of capital, evaluate investment performance, and test market efficiency. However, it is important to keep in mind that CAPM has its assumptions and limitations, and other factors should be considered in making decisions. This paper mainly studies the application and future development of capital asset pricing model in Chinese stock market through a literature review analysis. The conclusion of this paper is that the capital asset pricing model is widely used in China's stock market, which has a profound impact on the development of China's stock market, and many different types of models have been derived to deal with the risks that may appear in different fields.
Xingzhi Xiao (Wed,) studied this question.