The General Purpose of Identifying Multiple Factors in the APT

question 10

Multiple Choice

The general purpose of identifying multiple factors in the APT model is to:

• A)identify the top three factors that have the largest impact on the market rate of return.
• B)identify and eliminate all systematic risks from a portfolio.
• C)identify the quantity of each factor that is needed to reduce a portfolio's risk,as measured by beta,to a level equal to that of the overall market.
• D)reduce the unsystematic risk to a level where the unsystematic risk of one security is unrelated to the unsystematic risk of any other security.
• E)reduce the slope of the security market line,thereby reducing portfolio risk.

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Definitions:

Work-Related Behavior

Actions or conduct of employees that pertain to their job duties and responsibilities, including how they perform tasks and interact with colleagues.

Competencies

The combination of skills, knowledge, and abilities that are required to perform a specific job or task effectively.

Counterproductive Work Behaviors

Actions by employees that harm or intend to harm an organization and its members, such as theft or sabotage.

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Deliberate actions taken to damage, disrupt, or undermine the functioning, success, or integrity of a project, process, or organization.