Which of the Below Statements Is TRUE

question 29

Multiple Choice

Which of the below statements is TRUE?

• A) The APT states that the return on a security is dependent on its market sensitivity index and an unsystematic return.
• B) The CAPM states that the return on a security is linearly related to H factors.
• C) The APT asserts that an investor is compensated for accepting unsystematic risk
• D) The APT states that investors want to be compensated for all the factors that systematically affect the return of a security.

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Definitions:

Payment Obligation

A financial commitment that requires a party to pay a certain amount of money by a specified date.

Character

In finance, character often refers to the qualitative assessment of a borrower's integrity and history in meeting debt obligations, used in credit analysis.

Capacity

The maximum amount that something can contain or produce, often used in the context of production and manufacturing facilities.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for certain other costs.