Arbitrage Pricing Theory Is a Model That Relates Expected Returns

question 69

Multiple Choice

Arbitrage pricing theory is a model that relates expected returns on securities to

• A)security risk and yield spreads
• B)yield spreads and yield curve slope
• C)anticipated economic factors
• D)multiple risk factors

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Definitions:

Soviet Union

A former federal socialist state in eastern Europe and northern Asia, existing from 1922 to 1991, officially known as the Union of Soviet Socialist Republics (USSR).

Economic Instability

A condition where an economy experiences significant fluctuations in its aggregate output or growth rates, leading to unpredictable and often negative consequences for employment, income, and investment.

Political Instability

A situation in which a government or political system is at risk due to various factors like civil unrest, sudden changes in leadership, or economic crises.

North Atlantic Treaty Organization

A military alliance formed in 1949 for mutual defense and cooperation among North American and European countries.