Consider the One-Factor APT

question 72

Multiple Choice

Consider the one-factor APT.The variance of returns on the factor portfolio is 9%.The beta of a well-diversified portfolio on the factor is 1.25.The variance of returns on the well-diversified portfolio is approximately __________.

• A)3.6%
• B)6.0%
• C)7.3%
• D)14.1%
• E)none of the above

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Definitions:

Insect Flight Muscles

Specialized muscles in insects that provide the power for flight, capable of extremely fast contractions.

Collagen Fibers

Strong and flexible proteins that form the main component of connective tissue, giving support and structure to skin, bones, and other tissues.

Osteoblasts

Cells with the principal function to synthesize and secrete the collagen matrix and ground substance of bone tissue, initiating bone formation.

Sarcoplasmic Reticulum

The system of vesicles in a muscle cell that surrounds the myofibrils and releases calcium in muscle contraction; a modified endoplasmic reticulum.