The Process of Test the Single-factor Capital Asset Pricing Model

Abstract

The primary purpose is to test the Single-factor Capital Asset Pricing Model (CAPM) based on the Australian stock exchange market. At the same time, previous research explained the limitations and shortcomings of the Single-factor CAPM model and briefly introduced the optimization and change of the CAPM. This paper also points out whether investors and researchers can continue to use Treasury bonds as risk-free assets based on the high inflation rate in the United States.