Consider the Multifactor APT

question 17

Multiple Choice

Consider the multifactor APT. The risk premiums on the factor 1 and factor 2 portfolios are 5% and 3%, respectively. The risk-free rate of return is 10%. Stock A has an expected return of 19% and a beta on factor 1 of 0.8. Stock A has a beta on factor 2 of

• A) 1.33.
• B) 1.50.
• C) 1.67.
• D) 2.00.

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Definitions:

Muscle Fibers

The elongated cells that makeup skeletal muscles, responsible for contracting to produce movement.

Involuntary Control

The automatic regulation of body functions, such as heart rate and digestion, that are not consciously controlled by the brain.

Smooth Muscle

A type of muscle found in the walls of internal organs and blood vessels, which is not under conscious control.

Cardiac Muscle

Specialized muscle tissue found only in the heart, characterized by involuntary control and the presence of intercalated discs for synchronized contraction.