Consider the One-Factor APT

question 84

Multiple Choice

Consider the one-factor APT.The standard deviation of return on a well-diversified portfolio is 20%.The standard deviation on the factor portfolio is 12%.The beta of the well-diversified portfolio is approximately _________.

• A) 0.60
• B) 1.00
• C) 1.67
• D) 3.20

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Definitions:

Functionally Organized Firm

A company organized according to the functions each part of the organization performs, such as marketing, sales, and production.

Divisions' Performance

The assessment of how different segments or departments of a company are executing their functions and contributing to overall success.

Pay to Performance

A compensation strategy where an employee's pay is based directly on their performance outcomes or achievements.

R&D

Stands for research and development; the activities companies undertake to innovate and introduce new products or services.