Consider the Single Factor APT

question 78

Multiple Choice

Consider the single factor APT.Portfolios A and B have expected returns of 14% and 18%, respectively.The risk-free rate of return is 7%.Portfolio A has a beta of 0.7.If arbitrage opportunities are ruled out, portfolio B must have a beta of

• A)0.45.
• B)1.00.
• C)1.10.
• D)1.22.
• E)None of the options

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Definitions:

Generate a Hypothesis

The process of formulating a testable statement or prediction based on observations and theoretical insights.

Draw Conclusions

The process of analyzing the results of a study or data to form a judgment or insight about the hypothesis or research question.

Self-Reports

A research or assessment method where individuals provide data about themselves, usually through questionnaires or interviews, which can include personal feelings, thoughts, behaviors, or experiences.

Psychopathology

The study of mental disorders, including their symptoms, etiology (causes), and treatment, focusing on the maladaptive behavior of individuals.