Unlike the Capital Asset Pricing Model, the Arbitrage Pricing Theory

question 12

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) All of the above

---

Definitions:

Fire Extinguishers

Devices designed to suppress fires through the application of a substance such as foam, water, or dry chemical.

Ultraviolet Radiation

A form of electromagnetic radiation that comes from the sun and artificial sources like tanning beds, which can cause skin damage, eye problems, and increase the risk of skin cancer.

Reactive Compounds

Substances that readily engage in chemical reactions with other materials due to their unstable electron configurations.