The Factor F in the APT Model Represents

question 49

Multiple Choice

The factor F in the APT model represents

• A) firm-specific risk.
• B) the sensitivity of the firm to that factor.
• C) a factor that affects all security returns.
• D) the deviation from its expected value of a factor that affects all security returns.
• E) a random amount of return attributable to firm events.

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Definitions:

Uncollectible Accounts

Accounts receivable that a business does not expect to collect due to customers being unable or unwilling to pay.

Estimated

An approximation or informed guess of a value, amount, or size based on available data or trends but not derived from exact calculations.

Carrying Amount

The net value of an asset or liability recorded on the balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Allowance Account

An account used to adjust the carrying value of accounts receivable to the amount expected to be collected.