Consider the Single-Factor APT

question 10

Multiple Choice

Consider the single-factor APT. Stocks A and B have expected returns of 15% and 18%, respectively. The risk-free rate of return is 6%. Stock B has a beta of 1.0. If arbitrage opportunities are ruled out, stock A has a beta of

• A) 0.67.
• B) 1.00.
• C) 1.30.
• D) 1.69.
• E) 0.75.

---

Definitions:

Electrical Conductivity

A measure of how well a material allows the flow of electric current through it.

Valence Shell

Outermost orbital shell in an atom. The number of electrons in the valence plays a role in defining the electrical and physical characteristics of an element.

Chemical Properties

Characteristics of a substance that dictate how it reacts with other substances to form new products.

Electrical Resistance

The measure of the difficulty electrons face in flowing through a conductor, resulting in heat generation and energy dissipation.