Applicability Analysis of CAPM Model in the Context of Epidemic

Abstract

Under the impact of the epidemic, the economy of all countries has been affected to varying degrees, and the most obvious common one is that the global inflation rate has risen, thus resulting in the phenomenon of purchasing power deviation. The focus of this paper is that the traditional Capital Asset Pricing Model (CAPM) lacks the prediction of this part of the risk, so it can not realize the original intention of THE CAPM Model, completely to wash away this part of the risk. As well as the domestic and foreign research review in recent years, the literature analysis, the conclusion is drawn, in view of the traditional CAPM in the international portfolio investment deficiency, as well as the applicability in the real financial market, this paper suggests that under the purchasing power parity offset, the use of high-order CAPM through the international portfolio investment is a more stable choice.