Consider the Multifactor APT with Two Factors

question 39

Multiple Choice

Consider the multifactor APT with two factors. Stock A has an expected return of 17.6%, a beta of 1.45 on factor 1, and a beta of .86 on factor 2. The risk premium on the factor 1 portfolio is 3.2%. The risk-free rate of return is 5%. What is the risk-premium on factor 2 if no arbitrage opportunities exist?

• A) 9.26%
• B) 3%
• C) 4%
• D) 7.75%

Understand the theories of Hazan and Shaver regarding infant attachment and its effect on adult relationships.

Grasp the concept of similarity and its influence on interpersonal attraction and relationship satisfaction.

Comprehend Sternberg's theory of love components and their relevance in different relationship stages.

Recognize the types of love as defined by Hatfield and Berscheid, including companionate and passionate love, and their characteristics within relationships.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, capable of conducting business, entering into contracts, and owning assets.

Corporate Form

A legal structure for organizing a business as a separate legal entity, distinct from its owners, with its own rights and liabilities.

Advantages

The positive aspects or benefits associated with a decision, strategy, or action.

Franchise

A business model where a franchisee obtains the rights to operate a business under the franchisor's brand and system in exchange for a fee.