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Nathan is trying to decide which shipping company to use to transport his custom-made furniture to customers. Nathan is facing a decision about
Multifactor APT
A model in financial markets that describes how the returns of an asset can be determined by its exposure to multiple risk factors, as per the Arbitrage Pricing Theory.
Risk Premiums
The additional return expected by an investor for taking on a higher risk compared to a risk-free investment.
No Arbitrage
A principle stating that it is impossible to achieve risk-free profits from inconsistent or mispriced asset prices in efficient markets, as arbitrage opportunities are quickly exploited and corrected.
Risk Premium
The extra return over the risk-free rate that investors require to compensate them for the risk of holding a risky asset.
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