If a Security Pays $55 in One Year and $133

question 78

Multiple Choice

If a security pays $55 in one year and $133 in three years,its present value is $150 if the interest rate is

• A)5 percent.
• B)10 percent.
• C)12.5 percent.
• D)15 percent.

Understand the principles of the Fama-French Three Factor Model and its application in calculating expected stock returns.

Grasp the concept of the Arbitrage Pricing Theory (APT) and the assumptions underlying multifactor models.

Apply multifactor models to compute expected returns on portfolios, considering various risk premiums and betas.

Identify arbitrage opportunities by comparing the expected returns and the actual returns of portfolios.

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