Week 8: Factor Models Concept Objective Learn the differences between the CAPM and the APT. Instructions i) draw the SML and include one asset that is underpriced. ii) Explain how mispricings vanish in equilibrium according to the CAPM. ill) Explain how mispricings vanish according to the APT. Rubric Level 1 (Worst) Level 2 Level 3 Level 4 Novice Intermediate Proficient Advanced Organization No clear sequence Material Material explained in a Material explained in a explained/presented in logical manner logical, sophisticated a confusing manner and engaging manner Knowledge of Displays littleo Displays thorough Displays some understanding of the Displays sufficient understanding of the Content understanding of understanding of the concept concepts. Leaves concept content. Extra research is evident important information out Correctness Final answer and Final answer might be intermediate steps are Final answer and some of the intermediate steps are incorrect incorrect but most Everything is correct, both the final answer and all intermediate incorrect. intermediate steps are correct. steos. Your Creation Evaluations Feedback