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Capital Asset Pricing Model (CAPM) is one of the first asset pricing models to be applied in security valuation. It has had its share of criticism, both empirical and theoretical; however, with its intuitive appeal and simplicity, it has established itself as a useful tool used in practice. One of the most important implications of the model is that the expected stock returns are determined by their corresponding level of systematic risk and not the unsystematic risk. We test the CAPM on 30 stocks traded at Karachi Stock Exchange (KSE) using the SharpeLintner (1965) approach. The evidence does not validate standard CAPM model.

Salman Ahmed Shaikh. (2013) Testing Capital Asset Pricing Model on KSE Stocks , Journal of Managerial Sciences, Volume 7, Issue 2.
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