In Terms of the Risk/return Relationship in the APT

question 66

Multiple Choice

In terms of the risk/return relationship in the APT,

• A) only factor risk commands a risk premium in market equilibrium.
• B) only systematic risk is related to expected returns.
• C) only nonsystematic risk is related to expected returns.
• D) only factor risk commands a risk premium in market equilibrium, and only systematic risk is . related to expected returns.
• E) only factor risk commands a risk premium in market equilibrium, and only nonsystematic risk is related to expected returns.

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Definitions:

Physical

Refers to material objects, things that occupy space and can be perceived by the senses.

Accessory Equipment

Refers to additional or supplementary items or devices added to a primary system or machine to enhance its functionality or performance.

Specialty Products

Products that are regarded as unique or high-value, often requiring special effort to find or purchase.

Supplies

Goods or materials provided or available for use, particularly in the context of business operations, production processes, or personal needs.