In the APT Model, What Is the Nonsystematic Standard Deviation

question 19

Multiple Choice

In the APT model, what is the nonsystematic standard deviation of an equally-weighted portfolio that has an average value of σ(e_i) equal to 20% and 20 securities?

• A) 12.5%
• B) 625%
• C) 4.47%
• D) 3.54%
• E) 14.59%

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Definitions:

Activity Total

The composite or sum total of costs associated with a specific activity or operation within a business.

Standard Costing

A cost accounting method that uses standard costs for direct materials, direct labor, and manufacturing overhead to measure performance.

Cost Control

The practice of managing and reducing business expenses through efficient and effective use of resources.

Product Costing

The process of determining the total cost associated with producing a product, including materials, labor, and overhead costs.