The arbitrage pricing theory (APT):
A) considers only one factor and is a narrower model than the CAPM.
B) considers more factors than the CAPM and is a broader model.
C) is useful only for well-diversified portfolios of common stock.
D) is easy to implement because the factors are readily observable.

Question

Quizplus · Accepted Answer

APT considers multiple factors affecting asset returns, making it a broader model than the single-factor CAPM.

The Arbitrage Pricing Theory (APT)