Colin Had Been Having Trouble with Wild Animals

question 36

Multiple Choice

Colin had been having trouble with wild animals. He asked the salesman at Hardware Sales what kind of motion detection light would be best to install in his pump house. According to the Sale of Goods Act, Colin should expect a light that

• A) uses skill and labor for installation, therefore is not protected by the Act.
• B) is reasonably fit for the purpose.
• C) would not be restricted by the usual exemption clauses.
• D) will need careful installation for the product to be warranteed.
• E) meets his description.

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Definitions:

Security Market Line (SML)

Positively sloped straight line displaying the relationship between expected return and beta.

Arbitrage Pricing Theory (APT)

An equilibrium asset pricing theory that is derived from a factor model by using diversification and arbitrage. It shows that the expected return on any risky asset is a linear combination of various factors.

Arbitrage Pricing Theory (APT)

A financial model that estimates the price of assets based on the relationship between their expected return and macroeconomic factors that influence all assets' returns.

Market Risk Premium

The surplus return an investor aspires to earn by holding onto a market portfolio fraught with risks as compared to safeguarded, risk-free assets.