Consider the One-Factor APT

question 14

Multiple Choice

Consider the one-factor APT. The variance of returns on the factor portfolio is 11. The beta of a well-diversified portfolio on the factor is 1.45. The variance of returns on the well-diversified portfolio is approximately

• A) 23.1.
• B) 6.0.
• C) 7.3.
• D) 14.1.

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Definitions:

Obsessive-Compulsive Disorder

A mental disorder characterized by persistent, unwanted thoughts (obsessions) and repetitive, ritualistic behaviors (compulsions) that the individual feels compelled to perform.

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Sudden onset of intense panic in which multiple physical symptoms of stress occur, often with feelings that one is dying.

Phobic Disorder

A type of anxiety disorder characterized by an excessive and irrational fear response to a specific object, situation, or activity.

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An emotional and mental disorder resulting from living through or seeing a distressing event, leading to persistent flashbacks, nightmares, and overwhelming worry.