Some true or false questions about the APT: a. The APT factors cannot reflect diversifiable risks. b.The

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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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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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Question Posted: Jun 08, 2011 04:26 AM

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Some true or false questions about the APT: a. The APT factors cannot reflect diversifiable risks. b.The

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a True By definition the factors represent macroeconomic r...View the full answer

Principles of Corporate Finance

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