Which of the Following Is the Best Definition of Arbitrage

question 82

Multiple Choice

Which of the following is the best definition of arbitrage pricing theory (APT) ?

• A) A theory showing that the expected return on any risky asset is a linear combination of various factors.
• B) A risk that affects at most a small number of assets. Also called unique or asset-specific risks.
• C) A risk that influences a large number of assets. Also called market risk.
• D) Positively sloped straight line displaying the relationship between expected return and beta.
• E) Principle stating that spreading an investment across a number of assets eliminates some, but not all, of the risk.

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Definitions:

Weight Change

Refers to the fluctuation of a person's body weight over time, which can result from factors such as diet, exercise, and health conditions.

Set Point For Body Weight

A theory suggesting that the body regulates its weight and body fat level with internal controls, aiming to maintain a particular weight.

Natural Point Of Stability

An equilibrium state to which a system naturally tends to return after being disturbed.

Person's Current Weight

The actual weight of an individual at the present time.