Theoretical Framework for Stock Pricing Process based on Micro-Economic Decision Model

• Authors: Vitaly Kaganov
• Languages of publication: EN

Abstracts

EN

The most common model for asset pricing (CAPM) is problematic and does not match the reality. In this article, I introduce a theoretical framework for a new model which aims at avoiding the problems of CAPM and keeping its advantages, therefore allowing universality of asset pricing. The model is built on the economic principles, using a budget constraint and a Risk Appetite (RA) function. It is based on the micro-economic decision model, involving an expected value and dividing a stock price to objective and subjective prices. As a result, rational based individuals, just like individuals with non-rational factors, may use the model to calculate a future price stock in exactly the same way.

Keywords

EN

Asset Pricing; CAPM; Risk Appetite; Economic Approach

• Publisher: Uniwersytet Ekonomiczny w Poznaniu. Wydawnictwo Uniwersytetu Ekonomicznego w Poznaniu
• Journal: Research Papers in Economics and Finance
• Year: 2017
• Volume: 2
• Issue: 2
• Pages: 29-37

Dates

published

2017-07-25

Contributors

author

Vitaly Kaganov