Which Pricing Model Provides No Guidance Concerning the Determination of the Risk

question 30

Multiple Choice

Which pricing model provides no guidance concerning the determination of the risk premium on factor portfolios

• A)The CAPM
• B)The multifactor APT
• C)Both the CAPM and the multifactor APT
• D)Neither the CAPM nor the multifactor APT
• E)None of the options is a true statement.

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Definitions:

Financial Responsibility

Financial responsibility involves managing money in a way that allows an individual or organization to meet their obligations and prepare for future financial needs.

Ex Rights

Period when stock is selling without a recently declared right, normally beginning two business days before the holder-of-record date.

Stock Rights

Options granted to existing shareholders to purchase additional shares in the company at a predetermined price, usually within a short period.

Declared Right

A benefit or privilege announced by a company to its shareholders, such as the right to purchase additional shares at a determined price before the public.