In Developing the APT, Ross Assumed That Uncertainty in Asset

question 54

Multiple Choice

In developing the APT, Ross assumed that uncertainty in asset returns was a result of

• A) a common macroeconomic factor.
• B) firm-specific factors.
• C) pricing error.
• D) a common macroeconomic factor and firm-specific factors.

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Definitions:

Par Value

The nominal value of a bond or stock as declared by the issuer, which may not reflect its actual market value.

Cumulative

Refers to the total amount accumulated over a period of time or the aggregate of elements collected.

Depreciation Expense

Distributing the expense of a physical asset throughout its lifespan.

Cost of Goods Sold

The total cost of manufacturing or acquiring the products that were sold during a given period.