How An Investor makes Inⅴ estment decision The problem is how the investor evaluate the expected returns and risks when they make investment decisions We hereafter introduce some theories or models about how the value of an asset is determined or priced The capitalAsset Pricing Model (CaPm) The Factor Models(Fm) The arbitrary pricing Theory(apt)How An Investor Makes Investment Decision • The problem is how the investor evaluate the expected returns and risks when they make investment decisions. • We hereafter introduce some theories or models about how the value of an asset is determined or priced. – The Capital Asset Pricing Model (CAPM) – The Factor Models (FM) – The Arbitrary Pricing Theory (APT)