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

question 17

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 25% and 50 securities?

• A)12.5%
• B)625%
• C)0.5%
• D)3.54%

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Definitions:

General Adaptation Theory

A theory by Hans Selye that describes the body's short-term and long-term reactions to stress, including stages of alarm, resistance, and exhaustion.

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Mental Alert

The state of being fully aware, awake, and attentive.

Ego-Defense Mechanism

Psychological strategies unconsciously used by individuals to protect themselves from anxiety and unacceptable thoughts and feelings.