Consider the Multifactor APT

question 9

Multiple Choice

Consider the multifactor APT. The risk premiums on the factor 1 and factor 2 portfolios are 6% and 4%, respectively. The risk-free rate of return is 4%. Stock A has an expected return of 16% and a beta on factor-1 of 1.3. Stock A has a beta on factor-2 of

• A) 1.33.
• B) 1.05.
• C) 1.67.
• D) 2.00.

Comprehend the concept of economies of scale and network effects in market dynamics.

Understand the factors influencing rivalry and competition within industries.

Learn the steps involved in conducting an industry analysis.

Comprehend Porter’s Five Forces model as a tool for evaluating industry competitiveness.

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Definitions:

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