Which Pricing Model Provides No Guidance Concerning the Determination of the Risk

question 80

Multiple Choice

Which pricing model provides no guidance concerning the determination of the risk premium on factor portfolios?

• A) The CAPM
• B) The multifactor APT
• C) Both the CAPM and the multifactor APT
• D) Neither the CAPM nor the multifactor APT
• E) None of these are true statements.

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Definitions:

Long-term Relationships

Romantic or platonic connections between individuals that are maintained over a prolonged period, often characterized by mutual support and commitment.

Cognitive Dissonance Theory

A theory that suggests an uncomfortable tension arises from holding contradictory cognitions (e.g., beliefs, attitudes) simultaneously, leading to efforts to reduce the dissonance.

Hypocrites

Hypocrites are individuals who claim to have moral beliefs, standards, or virtues that their own behavior does not conform to; their actions contradict their stated beliefs or values.

Attitudes

A settled way of thinking or feeling about something, typically reflected in a person's behavior or expressed beliefs.