The paper reviews some aspects of arbitrage pricing theory (APT). It derives an improved version of the model and examines it in view of the APT debate, adding some new observations in favour of the model. The topics examined include: (a) model testability; (b) implications of approximate APT...

The ‘law of one accounting variable’ is defined in this paper as an extension of ‘the law of one price’. It says roughly that if the future payoffs of two assets are the same (in every state of the world), then the accounting variable of the assets are approximately the same. The paper...