In the APT Model, What Is the Nonsystematic Standard Deviation $\sigma$

question 12

Multiple Choice

In the APT model, what is the nonsystematic standard deviation of an equally-weighted portfolio that has an average value of $\sigma$ (e_i) equal to 20% and 20 securities?

• A)12.5%
• B)625%
• C)4.47%
• D)3.54%

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Definitions:

Chronic Obstructive Pulmonary Disease

A group of lung conditions that cause breathing difficulties, including emphysema and chronic bronchitis, often due to long-term exposure to harmful substances.

Bronchial Constriction

The narrowing of the bronchi in the lungs due to the tightening of surrounding smooth muscle, often as a response to asthma or other respiratory conditions.

Pulmonary Emphysema

A chronic respiratory disease characterized by the destruction of the air sacs in the lungs, leading to difficulty in breathing.

Cigarette Smoking

The act of inhaling and exhaling the smoke produced by burning tobacco contained in cigarettes, which is harmful to health.