Advantage(s)of the APT Is(are)

question 20

Multiple Choice

Advantage(s) of the APT is(are)

• A) that the model provides specific guidance concerning the determination of the risk premiums on the factor portfolios.
• B) that the model does not require a specific benchmark market portfolio.
• C) that risk need not be considered.
• D) a and b.
• E) b and c.

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Definitions:

Marginal Utility

The change in satisfaction or utility an individual gains from consuming an additional unit of a good or service.

Efficient

The quality of achieving maximum productivity with minimum wasted effort or expense.

Utility Functions

Mathematical representations that indicate the level of satisfaction or utility an individual receives from consuming different bundles of goods and services.

Clothing

Textile-based materials worn on the body, primarily used for protection, modesty, and decoration.