In Terms of the Risk/return Relationship in the APT

question 67

Multiple Choice

In terms of the risk/return relationship in the APT,

• A) only factor risk commands a risk premium in market equilibrium.
• B) only systematic risk is related to expected returns.
• C) only nonsystematic risk is related to expected returns.
• D) only factor risk commands a risk premium in market equilibrium, and only systematic risk is related to expected returns.
• E) only factor risk commands a risk premium in market equilibrium, and only nonsystematic risk is related to expected returns.

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Definitions:

Psychological Empowerment

The feeling of having control over one's work, a sense of meaning in work tasks, the ability to influence decisions, and confidence in one's abilities.

Leaders

Individuals who guide, direct, or influence others toward achieving goals or realizing a vision.

Independent Workers

Individuals who provide services or work on a project basis, often without a long-term commitment to any single employer or client.

Short-term Talent

Individuals or groups hired or utilized for their skills over a brief period, often to meet specific project or seasonal demands.