Unlike the Capital Asset Pricing Model, the Arbitrage Pricing Theory

question 77

Multiple Choice

Unlike the capital asset pricing model, the arbitrage pricing theory requires only the following assumption(s) :

• A) a quadratic utility function.
• B) normally distributed returns.
• C) the stochastic process generating asset returns can be represented by a factor model.
• D) a mean-variance efficient market portfolio consisting of all risky assets.
• E) capital markets are imperfectly competitive.

---

Definitions:

AIDS

Acquired Immune Deficiency Syndrome, a disease caused by the human immunodeficiency virus (HIV) that leads to a weakened immune system.

HIV

The Human Immunodeficiency Virus is a pathogen that targets the body's immune defenses, potentially progressing to AIDS in the absence of medical intervention.

STI

Sexually Transmitted Infections are infections that are primarily spread through sexual contact.

Erectile Disorder

A sexual dysfunction characterized by the inability to develop or maintain an erection during sexual activity.