Abstract

This paper presents the fundamentals and benefits of the arbitrage pricing model, emphasizing the significance of utilizing arbitrage pricing theory to the growth of the stock market. Firstly, the thesis analyzes and summarizes the mature research on the arbitrage pricing model abroad. This paper, taking into account the unique circumstances of the Chinese stock market, summarizes and contemplates the empirical examination of the arbitrage pricing model's applicability in the Chinese stock market. Most research lines in the Chinese market have been found to be in agreement with the arbitrage pricing principle, yet some studies have come to the contrary result. The fundamental reason is that the analysis of the model needs to be further improved, and China's stock market needs to be developed. Proposals to foster the growth of China's stock market are finally put forth.

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