The Arbitrage Pricing Theory (APT)and the CAPM Both Assume All

question 19

Multiple Choice

The arbitrage pricing theory (APT) and the CAPM both assume all except the following?

• A)Investors have homogeneous beliefs.
• B)Investors are risk-averse utility maximizers.
• C)Borrowing and lending can be done at the rate RF.
• D)Markets are perfect.

---

Definitions:

Gross Purchases

The total amount of all purchases made by a business before deducting any discounts, returns, or allowances.

Credit Terms

Credit terms are the payments conditions set by sellers for goods and services, including the period provided to the buyer to settle the owed amount.

Cash Conversion Cycle

A metric that shows the time span between a company's outlay of cash for raw materials and receiving payment from its customers, effectively measuring the time each net input dollar is tied up in the production and sales process.

Long-term Capital

Funds or assets held by a company for more than one year, used for financing long-term projects or investments.