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

Authors

  • Vitaly Kaganov PhD student, Poznań University of Economics and Business

Keywords:

Asset Pricing, CAPM, Risk Appetite, Economic Approach

Abstract

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.

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Published

2017-07-25

How to Cite

Kaganov, V. (2017). Theoretical Framework for Stock Pricing Process based on Micro-Economic Decision Model. Research Papers in Economics and Finance, 2(2), 29–37. Retrieved from https://journals.ue.poznan.pl/REF/article/view/40

Issue

Vol. 2 No. 2

Section

Articles

License

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