In the One Factor (APT) Model, the Characteristic Line to Estimate

question 25

Multiple Choice

In the one factor (APT) model, the characteristic line to estimate $\beta$ i passes through the origin, unlike the estimate used in the CAPM because:

• A)the relationship is between the actual return on a security and the market index.
• B)the relationship measures the change in the security return over time versus the change in the market return.
• C)the relationship measures the change in excess return on a security versus GNP.
• D)the relationship measures the change in excess return on a security versus the return on the factor about its mean of zero.
• E)Cannot be determined without actual data.

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Definitions:

Noise Privacy

The aspect of privacy that involves the ability to limit and control the auditory information one is exposed to or shares in a space.

High Self-monitors

Individuals who are highly sensitive to social cues and adjust their behavior accordingly to fit in with their surroundings.

External Cues

Environmental signals or indicators that can influence behavior and decision-making processes.

Situational Contingencies

External factors or conditions that influence the outcome of a decision or action, suggesting that the effectiveness of a response may depend on the specific circumstances.