Consider the One-Factor APT

question 69

Multiple Choice

Consider the one-factor APT. The variance of the return on the factor portfolio is .08. The beta of a well-diversified portfolio on the factor is 1.2. The variance of the return on the well-diversified portfolio is approximately ________.

• A) .1152
• B) .1270
• C) .1521
• D) .1342

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Definitions:

Stability

The state of being steady, consistent, and relatively unchanged, often regarded as a desirable condition in various contexts such as social, economic, and ecological systems.

Structural Functionalism

This theory posits that society functions as an intricate system, with its components cooperating to maintain cohesion and steadiness.

Social Feature

An aspect or characteristic of society that influences human behaviors, interactions, and relationships.

Universal Social Theory

A theory or perspective in sociology that strives to provide a general framework for understanding the diverse phenomena of society across all cultures and historical periods.