p of answer choices Both theories assume that undiversifiable risk is priced. Both theories assume that diversifiable risk is priced Both theories assume investors will hold a well-diversified portfolio Both the first and second responses are true. Both the first and third responses are
p of answer choices Both theories assume that undiversifiable risk is priced. Both theories assume that diversifiable risk is priced Both theories assume investors will hold a well-diversified portfolio Both the first and second responses are true. Both the first and third responses are
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
How is the arbitrage pricing theory (APT) similar to the capital asset pricing model ?
Group of answer choices
Both theories assume that undiversifiable risk is priced.
Both theories assume that diversifiable risk is priced
Both theories assume investors will hold a well-diversified portfolio
Both the first and second responses are true.
Both the first and third responses are true.
Expert Solution
Step 1
Step 1
APT aims to identify the market value of the collateral that may temporarily have a negative price. It assumes that market action is less likely to remain fully operational, and sometimes leads to the sale of goods inappropriately - more or less - for a while.
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