In the APT Model, What Is the Nonsystematic Standard Deviation

question 19

Multiple Choice

In the APT model, what is the nonsystematic standard deviation of an equally-weighted portfolio that has an average value of σ(e_i) equal to 20% and 20 securities?

• A) 12.5%
• B) 625%
• C) 4.47%
• D) 3.54%
• E) 14.59%

---

Definitions:

Average Cash Balance

The mean amount of cash held by a company over a specific period of time.

Weighted Average Delay

The average time delayed, taking into account the importance or weight of each component being delayed.

Collection Delay

The amount of time it takes for a business to receive the payment after it has issued an invoice.

Average Amount

The mean value obtained by dividing the sum of all values by the number of values.