Consider the One-Factor APT

question 69

Multiple Choice

Consider the one-factor APT. The variance of the return on the factor portfolio is .08. The beta of a well-diversified portfolio on the factor is 1.2. The variance of the return on the well-diversified portfolio is approximately ________.

• A) .1152
• B) .1270
• C) .1521
• D) .1342

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Definitions:

D'Arsonval Meter

A type of ammeter, based on the D'Arsonval galvanometer, used to measure electric current with a moving coil in a magnetic field.

Moving Coil

A type of electromagnetic actuator where a coil within a magnetic field moves when current flows through it, commonly found in loudspeakers and galvanometers.

Ammeter Shunt

A device used to change the full scale value of an ammeter by providing another path for current flow. Most ammeter shunts produce a voltage drop of 50 millivolts when rated current flows through them.

Low-resistance

A characteristic of a material or component that allows a large amount of electrical current to pass through with minimal opposition.