A Study by Chen, Roll, and Ross in 1986 Examined

question 2

Multiple Choice

A study by Chen, Roll, and Ross in 1986 examined all of the following factors in applying the Arbitrage Pricing Theory (APT) EXCEPT

• A) the return on a market value-weighted return.
• B) the monthly growth rate in U.S. industrial production.
• C) the change in the consumer price index (CPI).
• D) the expected change in the bond credit spread.
• E) the return of foreign stock indices.

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Definitions:

Traditional Accounting System

An accounting system primarily focused on the preparation of financial statements and compliance with accounting standards, often with less emphasis on detailed cost tracking or management decision support.

Current Performance

The present level of achievement or results shown by an individual, team, or entity, often assessed in the context of goals or benchmarks.

Previous Year's Performance

An analysis of financial or operational results from the preceding year, often used as a benchmark for current performance.

Measuring Competitiveness

The evaluation of a company's ability to compete in the market, based on factors like price, quality, and innovation.