Consider the One-Factor APT

question 61

Multiple Choice

Consider the one-factor APT. The variance of returns on the factor portfolio is 6%. The beta of a well-diversified portfolio on the factor is 1.1. The variance of returns on the well-diversified portfolio is approximately

• A) 3.6%.
• B) 6.0%.
• C) 7.3%.
• D) 10.1%.

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Definitions:

Inventory Costing Method

A system used to value inventory, such as First-In, First-Out (FIFO) or Last-In, First-Out (LIFO), impacting the calculation of cost of goods sold and ending inventory.

LIFO

Last In, First Out; an inventory valuation method where the last items placed in inventory are the first ones to be used or sold.

Ending Inventory

The total value of a business’s merchandise, raw materials, and products not yet sold at the end of an accounting period.

FIFO

"First In, First Out," an inventory valuation method where goods first acquired are the first to be sold, used in accounting to calculate the cost of goods sold.