Consider the One-Factor APT

question 65

Multiple Choice

Consider the one-factor APT. The standard deviation of returns on a well-diversified portfolio is 22%. The standard deviation on the factor portfolio is 14%. The beta of the well-diversified portfolio is approximately

• A) 0.80.
• B) 1.13.
• C) 1.25.
• D) 1.57.

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Definitions:

Personal Disposable Income

The amount of money that households have available for spending and saving after income taxes have been accounted for.

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Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply or interest rates.

Federal Reserve System

The central banking system of the United States, responsible for monetary policy, bank regulation, and the stability of the financial system.