This is a teaching note on a proposed approach that will correct a common flaw in the way the return-generating process within the APT framework is illustrated in textbooks. The problem can be resolved by dichotomizing the risk factors into two kinds. Based on this approach, the author eliminated the main source of confusion and developed an alternative way to teaching this important financial theory in a comprehensive and intuitive manner.
Arbitrage Pricing Theory; APT
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How to Cite
CHENG, Joseph M.. Differentiating Bullish From Bearish Factors In The Arbitrage Pricing Theory. American Journal of Business Education (AJBE), [S.l.], v. 3, n. 9, dec. 2010. ISSN 1942-2512. Available at: <https://www.cluteinstitute.com/ojs/index.php/AJBE/article/view/475>. Date accessed: 19 sep. 2017. doi: https://doi.org/10.19030/ajbe.v3i9.475.