In the One Factor (APT) Model, the Characteristic Line to Estimate

question 21

Multiple Choice

In the one factor (APT) model, the characteristic line to estimate bi passes through the origin, unlike the estimate used in the CAPM because:

• A)the relationship is between the actual return on a security and the market index.
• B)the relationship measures the change in the security return over time versus the change in
• The market return.
• C)the relationship measures the change in excess return on a security versus GNP.
• D)the relationship measures the change in excess return on a security versus the return on
• The factor about its mean of zero.
• E)Cannot be determined without actual data.

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Definitions:

Status Considerations

Factors related to an individual's or group's social standing, including wealth, education, and occupation, which influence their interactions and opportunities.

Economic Considerations

Factors or aspects related to finance and economy which influence decisions, policies, or actions in various contexts.

Private Property

Ownership of assets, including land and goods, by individuals or corporations, recognized and protected by law.

Gender Equality

The state in which access to rights or opportunities is unaffected by gender, ensuring that all individuals, regardless of their gender, have equal conditions for realizing their full human rights and potential.