An Investor Is Using the APT to Calculate Expected Returns

question 4

Essay

An investor is using the APT to calculate expected returns and make investment decisions.He has three years of data.The investor runs into a finance professor who offers to supply him with an additional three years of data free of charge.Why should the investor accept the offer?

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Definitions:

Resources

Inputs or assets used in the production of goods and services, including labor, capital, and natural materials.

Absolute Advantage

The advantage in the production of a good enjoyed by one country over another when it uses fewer resources to produce that good than the other country does.

Resources

The inputs or factors of production, including land, labor, capital, and entrepreneurship, that are used in the creation of goods and services.

Demand

The volume of commodities or services people are inclined and financially capable of purchasing at various price points during a designated time.