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:

Acquisition Method

An accounting method used to assess and combine the financial statements of two companies in the event of a merger or acquisition.

Fair Market Values

The price at which an asset would trade in a competitive auction setting, representing the asset's value between willing buyers and sellers.

Net Assets

Net Assets represent the residual interest in the assets of an entity after deducting its liabilities, essentially equivalent to equity in a for-profit organization.

Net Income

The total earnings or profit of a company after subtracting all expenses, including taxes, interest, and costs, representing the bottom line on an income statement.