Which of the Following Is (Are)true Regarding the APT

question 9

Multiple Choice

Which of the following is (are) true regarding the APT?
I.The Security Market Line does not apply to the APT.
II.More than one factor can be important in determining returns.
III.Almost all individual securities satisfy the APT relationship.
IV.It doesn't rely on the market portfolio that contains all assets.

• A)II, III, and IV
• B)II and IV
• C)II and III
• D)I, II, and IV
• E)I,II,III,and IV

---

Definitions:

Economic Profit

The differentiation between a business entity's gross revenue and its comprehensive costs, factoring in both explicit and implicit expenses.

Purely Competitive

Describes a market structure where many firms sell identical products, and no single seller can influence the market price.

Short Run

Within the field of economics, a timeframe where a company has at least one input that remains constant and unalterable.

Total Revenue

The entire revenue a company earns from selling products or services before deducting any costs.