Consider the One-Factor APT

question 27

Multiple Choice

Consider the one-factor APT. The standard deviation of return on a well-diversified portfolio is 20%. The standard deviation on the factor portfolio is 12%. The beta of the well-diversified portfolio is approximately ________.

• A) .60
• B) 1
• C) 1.67
• D) 3.20

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Definitions:

Pain

A distressing feeling and emotional response linked to real or possible harm to the body, or expressed in relation to such harm.

Tactile Sensory System

Pertains to the sense of touch and the perception of pressure, texture, and temperature through skin contact.

Mechanical Energy

The sum of an object's kinetic energy (energy in motion) and potential energy (stored energy based on position).

Thermal Energy

The internal energy present in a system due to its temperature.