In the APT Model, What Is the Nonsystematic Standard Deviation

question 59

Multiple Choice

In the APT model, what is the nonsystematic standard deviation of an equally-weighted portfolio that has an average value of σ(e_i) equal to 25% and 50 securities?

• A) 12.5%
• B) 625%
• C) 0.5%
• D) 3.54%
• E) 14.59%

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Definitions:

Successive Approximations

A process in behaviorism used for training where behaviors are broken down into simple steps and reinforced until the desired behavior is achieved.

Toilet Training

The process of teaching a young child to use the toilet for urination and defecation.

Rewards

Benefits or positive stimuli that are given in response to desired behaviors, often used in reinforcement learning.

Innately Satisfying Stimuli

Stimuli that inherently provide pleasure or satisfaction without the need for learning or prior experience.