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.

---

Definitions:

Settlement

An agreement reached between parties in a dispute, where they resolve their differences without going to court.

Chapter 7

A provision of the U.S. Bankruptcy Code that provides for the liquidation of a debtor's assets to pay off creditors.

Chapter 11

A chapter of the United States Bankruptcy Code that permits reorganization under the bankruptcy laws of the United States.

Chapter 13

A section of the U.S. bankruptcy code allowing individuals earning a regular income to develop a plan to repay all or part of their debts.