In Developing the APT, Ross Assumed That Uncertainty in Asset

question 19

Multiple Choice

In developing the APT, Ross assumed that uncertainty in asset returns was a result of

• A) a common macroeconomic factor.
• B) firm-specific factors.
• C) pricing error.
• D) a common macroeconomic factor and firm-specific factors.

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Definitions:

Learned Optimism

A concept in positive psychology that involves adopting a more positive and optimistic mindset, improving one's outlook on life and ability to cope with challenges.

Thinking Patterns

Characteristic ways in which individuals process information, make sense of the world, and solve problems, often influenced by their past experiences and cognitive biases.

Reinforcement Value

The degree to which a particular outcome or reward is desirable or satisfying to an individual, influencing their motivation and behavior.

Habitual Ways

Patterns or routines of behavior that are repeated regularly and tend to occur subconsciously.