Consider the Multifactor APT with Two Factors

question 55

Multiple Choice

Consider the multifactor APT with two factors.The risk premiums on the factor 1 and factor 2 portfolios are 5% and 6%,respectively.Stock A has a beta of 1.2 on factor 1,and a beta of 0.7 on factor 2.The expected return on stock A is 17%.If no arbitrage opportunities exist,the risk-free rate of return is ___________.

• A)6.0%
• B)6.5%
• C)6.8%
• D)7.4%
• E)none of the above

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Definitions:

Personal Safety

Measures and precautions taken by individuals to ensure their physical and psychological well-being.

Destructive Jealousy

A form of jealousy that negatively impacts relationships and individual well-being, often stemming from insecurity or fear of loss.

Threatening Messages

Communications intended to induce fear, anxiety, or a sense of danger in the recipient, often used to manipulate or control behavior.

Avoidant Jealousy

A defensive form of jealousy where individuals avoid dealing with feelings of jealousy or situations that could lead to jealousy.