Consider the One-Factor APT

question 4

Multiple Choice

Consider the one-factor APT. The standard deviation of returns on a well-diversified portfolio is 18%. The standard deviation on the factor portfolio is 16%. The beta of the well-diversified portfolio is approximately

• A) 0.80.
• B) 1.13.
• C) 1.25.
• D) 1.56.

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Definitions:

Intermittent Processes

Production processes characterized by non-continuous and irregular production operations, often used for producing a wide variety of products in small volumes.

Repetitive Focus

This refers to the concentration on repeating tasks or procedures to improve efficiency or skill.

Flash Frozen

A process of freezing foods or substances rapidly to preserve freshness and minimize ice crystal formation.

Fixed Costs

Business expenses that remain unchanged regardless of the level of production or sales, such as rent, salaries, and insurance premiums.