Consider the One-Factor APT

question 23

Multiple Choice

Consider the one-factor APT.Assume that two portfolios,A and B,are well diversified.The betas of portfolios A and B are 1.0 and 1.5,respectively.The expected returns on portfolios A and B are 19% and 24%,respectively.Assuming no arbitrage opportunities exist,the risk-free rate of return must be ____________.

• A)4.0%
• B)9.0%
• C)14.0%
• D)16.5%
• E)none of the above

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Definitions:

Shared Meanings

Shared meanings refer to the common understanding or interpretation of symbols, language, or behaviors amongst members of a particular group or society.

Material Culture

Physical objects, resources, and spaces that people use to define their culture, including homes, clothing, tools, and artworks.

Cultural Tenet

A core principle or belief that is widely held and influences the culture of a society.

Jaywalking

The act of crossing a street illegally or recklessly, not using designated crosswalks or ignoring pedestrian signals.