Question: Some true or false questions about the APT: a. The APT factors cannot reflect diversifiable risks. b.The market rate of return cannot be an APT

Some true or false questions about the APT:

a. The APT factors cannot reflect diversifiable risks.

b.The market rate of return cannot be an APT factor.

c. Each APT factor must have a positive risk premium associated with it; otherwise the model is inconsistent.

d. There is no theory that specifically identifies the APT factors.

e. The APT model could be true but not very useful, for example, if the relevant factors change unpredictably.

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