In the One Factor (APT)model,the Characteristic Line to Estimate B_i

question 29

Multiple Choice

In the one factor (APT) model,the characteristic line to estimate b_i passes through the origin,unlike the estimate used in the CAPM because:

• A)the relationship is between the actual return on a security and the market index.
• B)the relationship measures the change in the security return over time versus the change in the market return.
• C)the relationship measures the change in excess return on a security versus GNP.
• D)the relationship measures the change in excess return on a security versus the return on the factor about its mean of zero.
• E)Cannot be determined without actual data.

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