Arbitrage Pricing Theory Is Based on the Premise That More

question 4

True/False

Arbitrage pricing theory is based on the premise that more than one factor affects stock returns, and the factors are specified to be (1) market returns, (2) dividend yields, and (3) changes in inflation.

---

Definitions:

Straight-Line

A method of calculating depreciation of an asset which assumes the asset depreciates equally over its useful life.

Tax Basis

The value of an asset for tax purposes, used to calculate capital gains or losses upon disposition of the asset.

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Reportable Segment

A part of an organization distinguished by its business activities, products, or services, which is significant enough to require separate financial reporting under financial reporting standards.