Consider the One-Factor APT

question 32

Multiple Choice

Consider the one-factor APT. The standard deviation of returns on a well-diversified portfolio is 14%. The standard deviation on the factor portfolio is 10%. The beta of the well-diversified portfolio is approximately

• A) 0.80.
• B) 1.40.
• C) 1.65.
• D) 1.82.

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Definitions:

Dialectical Method

A philosophical methodology, especially associated with Hegel and Marx, emphasizing the resolution of contradictions in historical, social, and intellectual phenomena.

Capitalism

An economic system characterized by private or corporate ownership of goods and services, where investment and the production, distribution, and prices of goods are determined mainly by competition in a free market.

G.W.F. Hegel

A German philosopher best known for his contributions to German idealism, particularly his concepts of the absolute, the dialectic process, and the historical development of consciousness.

Proletariat

The working-class people or those without access to the means of production, who sell their labor to live, according to Marxist theory.