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The parables, premium puzzles, and the CAPM

Article Information:

Title:

The parables, premium puzzles, and the CAPM

Author(s):

Hong-Jen Lin, David C. VanderLinden

Journal:

Managerial Finance

Year:

2006

Volume:

32

Issue:

10

Page:

792 - 801


ISSN:

0307-4358


DOI:

10.1108/03074350710688288

Publisher:

Emerald Group Publishing Limited

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Abstract:

Purpose – The purpose of this paper is to ascertain whether religions parables are relevant to finance.

Design/methodology/approach – In the Gospel, one may find parallels to the capital asset pricing model in the context of the parables of the kingdom of God. For instance, the duality in the parables is particularly analogous to the gain – loss decision making in the practice and theory of finance. Moreover, several parables giving insight into investor reactions may help explain the premium puzzles in asset pricing.

Findings – Based on a thorough analysis, one can see that the parables contribute to finance practice and education.

Originality/value – This study is the first attempt to link parables in the Gospel of Matthew to finance theories.

Keywords:

Capital asset pricing model, Finance, Religion


Article Type:

Conceptual paper


Article URL:

http://www.emeraldinsight.com/10.1108/03074350710688288

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