Question: The APT itself does not provide guidance concerning the factors that one might expect to should researchers decide which factors to investigate? Why, for example,

The APT itself does not provide guidance concerning the factors that one might expect to should researchers decide which factors to investigate? Why, for example, is industrial production a reasonable factor to test for a risk premium?
If the APT is to be a useful theory, the number of systematic factors in the economy must be small. Why?
Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 6%, and all stocks have independent firm-specific components with a standard deviation of 45%. Portfolios A and B are both well-diversified with
The APT itself does not provide guidance concerning the factors that

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