Consider a One-Factor APT Model

question 10

Multiple Choice

Consider a one-factor APT model. The standard deviation of returns on a well-diversified portfolio is 30%. The standard deviation on the factor portfolio is 20%. What is the beta of the well-diversified portfolio?

• A) 0.9
• B) 1.5
• C) 1.75
• D) 2.0

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Definitions:

Single-Price Monopoly

A market structure where a monopoly exists and sells a product for the same price to all customers without discrimination.

Pay-per-view

A service through which consumers can pay to watch a particular show, event, or movie as a one-time purchase.

Producer Surplus

The difference between what producers are willing to receive for a good or service versus what they actually receive, reflecting benefits beyond their minimum requirement.

Monopoly

A market structure characterized by a single seller who has exclusive control over the supply and pricing of a product or service.