An Important Difference Between CAPM and APT Is

question 3

Multiple Choice

An important difference between CAPM and APT is

• A) CAPM depends on risk-return dominance;APT depends on a no arbitrage condition.
• B) CAPM assumes many small changes are required to bring the market back to equilibrium;APT assumes a few large changes are required to bring the market back to equilibrium.
• C) implications for prices derived from CAPM arguments are stronger than prices derived from APT arguments.
• D) all of these are true.
• E) both a and b are true.

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Definitions:

Gradual Emancipation

Refers to the process of ending slavery slowly over time, often through legislative measures that freed enslaved individuals in stages or at a certain age.

Fries's Rebellion

A tax revolt among Pennsylvania Dutch farmers in the late 1790s, protesting federal property taxes to fund an undeclared war against France.

Federalists

A political group that supported the adoption of the U.S. Constitution, favoring a strong federal government and a system of checks and balances.

John Fries

The leader of Fries's Rebellion, a tax revolt among Pennsylvania Dutch farmers in the late 18th century.