Imposing the No-Arbitrage Condition on a Single-Factor Security Market Implies

question 29

Multiple Choice

Imposing the no-arbitrage condition on a single-factor security market implies which of the following statements?I) The expected return-beta relationship is maintained for all but a small number of well-diversified portfolios.II) The expected return-beta relationship is maintained for all well-diversified portfolios.III) The expected return-beta relationship is maintained for all but a small number of individual securities.IV) The expected return-beta relationship is maintained for all individual securities.

• A) I and III
• B) I and IV
• C) II and III
• D) II and IV
• E) Only I is correct.

---

Definitions:

Generation X

The demographic cohort following the Baby Boomers and preceding the Millennials, generally defined as individuals born between the early-to-mid 1960s and early 1980s.

Work-Life Balance

The equilibrium between professional responsibilities and personal life, ensuring neither is neglected at the expense of the other.

Command and Control Culture

An organizational culture characterized by strict hierarchical structure and decision-making processes, where orders flow from the top down.

Technological Force

This refers to the impact of technology on the market, work environment, and business operations, encompassing innovations, tech trends, and the digital transformation process.