Describe rationale of suggested investment strategy assume

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Suppose you are an investment advisor. You suggest your clients to buy stocks of small firms and stocks with high ratios of book equity to market equity (B/M). (1) Explain the rationale of your suggested investment strategy (suppose the CAPM is your benchmark model). (2) Explain the multifactor APT model that incorporates size and book-to-market equity as proxies for systematic risk exposures and provide risk- and behavioral-based interpretations of these two additional risk exposures.Explain the pros and cons of each approach.

Reference no: EM13476691

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