The APT Requires a Benchmark Portfolio

question 48

Multiple Choice

The APT requires a benchmark portfolio

• A) that is equal to the true market portfolio.
• B) that contains all securities in proportion to their market values.
• C) that need not be well-diversified.
• D) that is well-diversified and lies on the SML.
• E) that is unobservable.

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Definitions:

Social Alliances

Relations or partnerships formed between individuals or groups for mutual benefit or to achieve common goals.

Highly Stereotyped

Referring to actions or behaviors that are very predictable and lack variation.

New Shelters

Structures or locations designated as places of safety or refuge, commonly used to refer to housing solutions for the homeless or victims of disasters.

Smiling Behavior

Smiling behavior involves the upward curvature of the mouth, which is universally recognized as an expression of happiness, friendliness, or amusement.