To Estimate the Required Return for a Security Using APT

question 1

Multiple Choice

To estimate the required return for a security using APT or CAPM, it is necessary to have:

• A) last period's return, beta, and the standard deviation.
• B) last period's return, beta, and the risk-free rate.
• C) beta, the market risk premium, and the risk-free rate.
• D) beta, last period's return, and the standard deviation.
• E) beta, last period's return, and the market risk premium.

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Definitions:

Misinterpretations

Incorrect or misrepresented understanding of a message, situation, or intention.

Acceptance

The act of acknowledging reality or admitting the reality of something, often a situation or an aspect of one's self, without attempting to change it, protest, or exit.

Non-Intrusive

Not causing disruption or annoyance through being unwelcome or uninvited.

Transference Responses

Emotional reactions transferred to a therapist from other significant relationships in a patient's life, often explored in psychoanalytic therapies.