St. Deviation Unique Risk = Firm Specific = Diversifiable Total Risk Market Risk = Systematic = Non diversifiable Number of Securities 21. Based on the graph above, what is the contribution of the APT (Arbitrage Pricing Theory) as compared to the Markowitz Model? c. a. Markowitz Model only looks at Market Driven Risk and ignores all else b. Markowitz used Var (ei) as a measure of risk APT showed that total risk has to include both Market Driven and Firm Specific parts d. APT showed that Market Driven Risk can be separated into to two parts APT introduced the concept that diversification is a good idea e