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The parables, premium puzzles, and the CAPM

Hong‐Jen Lin (Nyack College Manhattan Campus, Graduate School of Business Administration, New York, USA)
David C. VanderLinden (School of Business, Southern Maine University, Portland, Maine, USA)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 October 2006

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2263

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

Citation

Lin, H. and VanderLinden, D.C. (2006), "The parables, premium puzzles, and the CAPM", Managerial Finance, Vol. 32 No. 10, pp. 792-801. https://doi.org/10.1108/03074350710688288

Publisher

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Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited