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This paper examines the tradeoff between equity price risk and returns obtained through various approaches. Capital asset pricing model (CAPM) and arbitrage pricing model (APT) are considered to be the fundamental building blocks of the portfolio theory, while these models only provide some intuition to risk but they do not account for the probability of adverse moves in the risk factors. Empirically, we have evidence that beta values tend to be insignificant in terms of a multifactor of BIRR model using APT approach. VAR values seem to have fitted in the BIRR model very well and have improved the stability in terms of explaining the returns acquired through APT approach. Therefore, we have also affixed the returns obtained through arbitrage pricing model with the value at risk (VAR) values such as to measure the downside risk. The theory that is proposed is distinctive and its empirical application has been presented in the paper.

Talha-Bin-Ali Khan, Ali Khizar Aslam. (2009) Equity Price Risk and Return: Evidence from the Karachi Stock Exchange, Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-07, Issue-1.
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