An appealing feature of the APT model is that:
A) It makes fewer assumptions about investor behavior and the market structure.
B) Is simple to use.
C) Is easier to implement.
D) Is more accurate in estimating the expected rate of return of an asset.
E) None of the above.

Question

Quizplus · Accepted Answer

The Arbitrage Pricing Theory (APT) model is appealing because it makes fewer assumptions about investor behavior and the market structure compared to other models, such as the Capital Asset Pricing Model (CAPM). This flexibility is one of its key advantages.

An Appealing Feature of the APT Model Is That