Decoding the Enigma of Asset Pricing: A Theoretical and Empirical Investigation into Factors Driving Asset Valuation

Abstract

Asset pricing, a cornerstone of modern finance, attempts to unravel the complexities underlying the valuation of financial assets, encompassing stocks, bonds, derivatives, and other securities. Understanding asset pricing is crucial for investors, portfolio managers, and financial institutions to make informed investment decisions and effectively manage risk. This article delves into the theoretical and empirical foundations of asset pricing, exploring the factors that drive the valuation of financial assets.