Consider the Multifactor APT with Two Factors

question 31

Multiple Choice

Consider the multifactor APT with two factors.Stock A has an expected return of 16.4%,a beta of 1.4 on factor 1 and a beta of .8 on factor 2.The risk premium on the factor 1 portfolio is 3%.The risk-free rate of return is 6%.What is the risk-premium on factor 2 if no arbitrage opportunities exit?

• A)2%
• B)3%
• C)4%
• D)7.75%
• E)none of the above

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Revenue Collected

Revenue Collected pertains to the total amount of money received by an organization, government, or business from various sources, such as sales, taxes, or services rendered.

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Payroll Tax

Financial demands on employers and employees, typically derived as a percentage of the remunerations paid to staff.