Consider the Multifactor APT

question 17

Multiple Choice

Consider the multifactor APT. The risk premiums on the factor 1 and factor 2 portfolios are 5% and 3%, respectively. The risk-free rate of return is 10%. Stock A has an expected return of 19% and a beta on factor 1 of 0.8. Stock A has a beta on factor 2 of

• A) 1.33.
• B) 1.50.
• C) 1.67.
• D) 2.00.

---

Definitions:

Imperialism

A policy or practice by which a country extends its power and dominion over other nations or territories through colonization, military conquest, or economic domination.

Usury

is the practice of charging excessively high interest rates on loans, which has historically been considered morally reprehensible by many societies.

Maritime Power

Maritime power refers to a nation's strength and capability in navigating, controlling, and utilizing the seas for military, trade, or exploration purposes.

Signoria

A form of government in Italian city-states during the medieval and Renaissance periods, characterized by rule by a single lord or a hereditary ruling family.