The APT model postulates that a security's expected return is influenced by:
A) A single market index.
B) A variety of factors.
C) Market and nonmarket risks.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

The Arbitrage Pricing Theory (APT) model suggests that a security's expected return is influenced by a variety of factors, not just a single market index. This includes both market and non-market risks, but the theory itself emphasizes multiple factors rather than a singular index or all-encompassing risks.

The APT Model Postulates That a Security's Expected Return Is