The Feature of the APT That Offers the Greatest

question 13

Multiple Choice

The feature of the APT that offers the greatest potential advantage over the CAPM is the

• A) use of several factors instead of a single market index to explain the risk-return relationship.
• B) identification of anticipated changes in production, inflation, and term structure as key factors in explaining the risk-return relationship.
• C) superior measurement of the risk-free rate of return over historical time periods.
• D) variability of coefficients of sensitivity to the APT factors for a given asset over time.
• E) None of the options are correct.

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Definitions:

Note

A promise by the maker of the note to pay the payee of the note.

Reasonable Identification

The process of sufficiently identifying an individual through the use of valid and reliable means or documents.

Fraud In The Factum

A liability defense available to a party who signs a negotiable instrument without knowing that it is a negotiable instrument.

Negotiable Instrument

A written assurance for the remittance of a fixed sum of money, payable either on demand or at a future date, with the document clearly stating the name of the individual making the payment.