Arbitrage Pricing Theory (APT) is an influential theory that focuses on the pricing of financial assets. Unlike the Capital Asset Pricing Model (CAPM), APT is based on the idea that the price of an asset should be based on multiple risk factors and not just market risk. The core of APT is that two identical assets cannot be priced differently; if they are, arbitrage will quickly eliminate the difference. This model provides an alternative framework for understanding price formation in financial markets.