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:

Avoidantly Attached

Referring to an attachment style characterized by difficulty in trusting others and maintaining close relationships.

Cognitive Dissonance

The feeling of discomfort caused by holding conflicting beliefs or values, or by acting in contradiction to one's beliefs.

Self-Monitoring

The tendency to regulate behavior to meet the demands of social situations.

Minimize Mistakes

The process or effort to reduce the number or severity of errors in a particular activity or process.