Analysis of the Evolution of the Multiple Factors Financing Model

Abstract

The asset pricing model becomes a significant financial model to estimate the prices of financial assets. Nowadays, scholars are still extending the model to improve its feasibility in both theoretical and practical aspects. Against the background, the study aims to review the evolution and application of the models as well as propose some limitations and prospects of them. According to the analysis, it is found that asset models are constantly being optimized. Furthermore, after the five-factor model matures, some scholars also add new factors based on their own insights. In addition, it is interesting to note that the asset pricing models are helpful in making investment strategies. However, the models still have limitations such as interference from irrational factors, the existence of assumptions, etc. Therefore, we put forward some methods to avoid these limitations and propose prospects for the future. These findings provide guidelines for investors to scientific asset pricing methods and more factor indicators with reference values to obtain more returns in the capital market and investment portfolio.