A Study by Chen,Roll,and Ross in 1986 Examined All of the Following

question 20

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 the

• A) Return on a market value-weighted return.
• B) Monthly growth rate in U.S. industrial production.
• C) Change in the consumer price index (CPI).
• D) Expected change in the bond credit spread.
• E) All of the above factors were used in their 1986 study.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Common Shares

Equity securities that represent ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Preferred Shares

A class of stock that provides shareholders with a priority claim on assets and earnings before common stockholders, usually including fixed dividend payments.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.