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JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 1 NO 2 OCTOBER 2003

ASSESSING RETURNS OF CAPITAL INVESTMENTS:-
THE ARBITRAGE PRICING THEORY APPROACH

AKUJUOBI, A.B.C
LECTURER, PROJECT MANAGEMENT TECHNOLOGY
DEPARTMENT, FEDERAL UNIVERSITY OF TECHNOLOLGY OWERRI, IMO STATE NIGERIA

ABSTRACT
Markowitz and his contemporaries, in search for an optimum portfolio, seemed to believe that an investment return solely depended on a one single-factor model-investment risk. Even the more generalized capital asset pricing model (CAPM), still undermined the influence of other factors beside risk. This seeming shortcoming is addressed by the Arbitrage Pricing Theory (APT) as a multifactor model. However, we conclude by advocating a combination of both the CAPM and APT for a more realistic predictive approach to assessing the returns of capital investments.

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