Since the Factors and Their Measurement for Use in the Arbitrage

question 32

True/False

Since the factors and their measurement for use in the arbitrage pricing theory (APT )model have become fairly standardized,the APT model is becoming a more popular alternative to the CAPM in estimating the market risk premium.

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Definitions:

Consumer Sovereignty

The theory that consumer preferences and choices dictate the production of goods and services in an economy.

Resource Costs

The expenses incurred in acquiring the natural, human, and capital resources needed to produce goods or services.

Private Producer

An individual or company that produces goods or services in a market economy without direct government intervention.

Market Economy

An economic system where prices and production are determined by unrestricted competition between privately owned businesses.