Capital Asset Prices: a Theory of Market Equilibrium Under Conditions of Risk
American Finance Association
Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk Author(s): William F. Sharpe Source: The Journal of Finance, Vol. 19, No. 3 (Sep., 1964), pp. 425-442 Published by: Blackwell Publishing for the American Finance Association Stable URL: http://www.jstor.org/stable/2977928 . Accessed: 23/08/2011 00:15
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The
VOL. XIX
journal
of
FINANCE
No. 3
SEPTEMBER 1964
CAPITAL ASSET PRICES: A THEORY OF MARKET EQUILIBRIUM UNDER CONDITIONS OF RISK*
WILLIAM F. SHARPEt I. INTRODUCTION
ONE OF THE PROBLEMSwhich has plagued those attempting to predict the
behavior of capital markets is the absence of a body of positive microeconomic theory dealing with conditions of risk. Although many useful insights can be obtained from the traditional models of investment under conditions of certainty, the pervasive influence of risk in financial transactions has forced those working in this area to adopt models of price behavior which are little more than assertions. A typical classroom explanation of the determination of capital asset prices, for example, usually begins with a careful and relatively rigorous description of the process through which individual preferences and physical relationships interact to determine an equilibriumpure interest
Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk Author(s): William F. Sharpe Source: The Journal of Finance, Vol. 19, No. 3 (Sep., 1964), pp. 425-442 Published by: Blackwell Publishing for the American Finance Association Stable URL: http://www.jstor.org/stable/2977928 . Accessed: 23/08/2011 00:15
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
Blackwell Publishing and American Finance Association are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Finance.
http://www.jstor.org
The
VOL. XIX
journal
of
FINANCE
No. 3
SEPTEMBER 1964
CAPITAL ASSET PRICES: A THEORY OF MARKET EQUILIBRIUM UNDER CONDITIONS OF RISK*
WILLIAM F. SHARPEt I. INTRODUCTION
ONE OF THE PROBLEMSwhich has plagued those attempting to predict the
behavior of capital markets is the absence of a body of positive microeconomic theory dealing with conditions of risk. Although many useful insights can be obtained from the traditional models of investment under conditions of certainty, the pervasive influence of risk in financial transactions has forced those working in this area to adopt models of price behavior which are little more than assertions. A typical classroom explanation of the determination of capital asset prices, for example, usually begins with a careful and relatively rigorous description of the process through which individual preferences and physical relationships interact to determine an equilibriumpure interest