The Feature of the APT That Offers the Greatest Potential

question 10

Multiple Choice

The feature of the APT that offers the greatest potential advantage over the CAPM is the ______________.

• A) use of several factors instead of a single market index to explain the risk-return relationship
• B) identification of anticipated changes in production,inflation and term structure as key factors in explaining the risk-return relationship
• C) superior measurement of the risk-free rate of return over historical time periods
• D) variability of coefficients of sensitivity to the APT factors for a given asset over time
• E) none of these

---

Definitions:

Fullest Extent

To the greatest degree or highest level of performance, capacity, or utilization possible.

Experimenter

A person who conducts a controlled test or investigation in the context of scientific research.

Conversational Distance

The physical space preferred between individuals during communication, which can vary culturally and contextually.

International Students

Individuals who pursue their education in a country different from their country of citizenship, often facing unique challenges and opportunities.