The Feature of the APT That Offers the Greatest Potential

question 77

Multiple Choice

The feature of the APT that offers the greatest potential advantage over the CAPM is the

• A) use of several factors instead of a single market index to explain the risk-return relationship.
• B) identification of anticipated changes in production, inflation, and term structure as key factors in explaining the risk-return relationship.
• C) superior measurement of the risk-free rate of return over historical time periods.
• D) variability of coefficients of sensitivity to the APT factors for a given asset over time.
• E) None of the options are correct.

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