Which of the Following Comparisons of the Capital Asset Pricing

question 44

Multiple Choice

Which of the following comparisons of the Capital Asset Pricing Model (CAPM) and the Arbitrage Pricing Model (APT) is (are) true?

• A)CAPM bases the expected return on an asset on one factor--the market portfolio; the APT bases the expected return on a number of economic factors.
• B)CAPM is based on the theory that an asset's returns should compensate the investor for the risk of the investment. Risk is not factored into the APT.
• C)While CAPM requires a number of estimates, the APT factors and their values are known with certainty.
• D)All of the above statements are true.

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Definitions:

CIM

Computer Integrated Manufacturing, an approach to manufacturing that integrates computer systems with physical manufacturing processes for efficiency and productivity improvements.

PLM

Product Lifecycle Management, a strategic approach to managing the series of changes a product goes through, from its design and development to its ultimate retirement.

POM

Principles of Management; these are fundamental guidelines for the management of an organization concerning its mission, vision, and objectives.

TPS

Acronym for Transaction Processing Systems, which are software and hardware systems designed for processing business transactions efficiently and accurately.