The Research on the Application of CAPM Model in Chinese Stock Market

Abstract

With the improvement of living standards, more and more people tend to use their savings to make stock investment, and how to make good use of precious capital for project investment, industrial support policy of the government how to develop practical, make the flow of resources efficiently has the development potential and competitive enterprise project, which requires us to make accurate judgment and the correct decision. By adopting the method of regression analysis, carries on the empirical analysis of China's securities market sampling, shows that, by using statistical analysis methods, this study can select a relatively appropriate market portfolio yield, improve the accuracy of asset value and asset allocation, which is an effective and analytical obstacle to the use of Capital Asset Pricing Model (CAPM) to the China's capital market. And then put forward some model to analyze the enlightenment of capital and asset pricing for the stock market. The study draws a conclusion that the beta of a stock plays a decisive role in investing. Stocks with different beta values are selected according to different stock market conditions in order to achieve the best expected annualized return.