Based on a Multi-Factor APT Model, the Concept of Portfolio

question 11

Multiple Choice

Based on a multi-factor APT model, the concept of portfolio diversification is to minimize which one of the following?

• A) weighted average of betas
• B) weighted average of betas * F
• C) F
• D) weighted average of unsystematic risks
• E) weighted average of expected returns

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Definitions:

Organized

Refers to being arranged or structured in a systematic way, often implying efficiency and orderliness.

Phonemes

The smallest units of sound in a language that distinguish one word from another.

Adjective

A part of speech that describes, modifies, or gives more information about a noun or pronoun.

Infinite Generativity

The ability to produce an endless number of meaningful sentences using a finite set of words and rules.