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.

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Definitions:

WAIS-III

The Wechsler Adult Intelligence Scale-Third Edition, a commonly used test for assessing adult and adolescent intelligence.

WISC-IV

An abbreviation for the Wechsler Intelligence Scale for Children - Fourth Edition, a widely used test designed to measure the intelligence of children ages 6 to 16.

Creativity

The capacity to generate unique and novel concepts, or to create something innovative or creative.

Intelligence

The ability to learn, understand, and apply knowledge, to think abstractly, and to solve problems.