what are some alternatives to the capm 
because of its criticisms several alternative models to the capital asset pricing model capm have been developed to understand the relationship between risk and reward in investments one of these is arbitrage pricing theory apt a model that looks at multiple factors grouped into macroeconomic or company specific factors 5 another is the fama french 3 factor model which expands on capm by adding company size risk and value risk factors to the market risk factors 6in 2015 fama and french adapted their model to include five factors along with the original three factors the new model adds the concept that companies reporting higher future earnings have higher returns in the stock market a factor referred to as profitability the fifth factor referred to as investment relates to the concept of internal investment and returns suggesting that companies directing profit toward major growth projects are likely to experience losses in the stock market 7