According to the Arbitrage Pricing Theory, the Return on a Stock

question 2

Multiple Choice

According to the arbitrage pricing theory, the return on a stock

• A)is not related to the expected return on the stock
• B)depends on the stock's responsiveness to unexpected changes
• C)is reduced through the construction of diversified portfolios
• D)equals the market return if the expected rate of inflation is realized

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Definitions:

Caudate Nucleus

A curved, elongated nucleus located within the brain, playing a key role in various functions including motor processing, learning, memory, and emotion regulation.

Corpus Striatum

Caudate nucleus, putamen, and globus pallidus; so-named because of the striations caused by intermixing of gray and white matter, which result from the number of tracts crossing the anterior portion of the corpus striatum.

Subthalamic

Pertaining to the location or region under or beneath the thalamus in the brain, often referring to the subthalamic nucleus involved in motor control.

Central Sulcus

A prominent landmark of the brain, separating the parietal lobe from the frontal lobe.