Investments Study Set 2

Business

Quiz 10 :
Arbitrage Pricing Theory and Multifactor Models of Risk and Return

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Quiz 10 :
Arbitrage Pricing Theory and Multifactor Models of Risk and Return

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C Explanation: Both models attempt to explain asset pricing based on risk/return relationships.

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A Explanation: 17.6% = 1.45(3.2%) + .86x + 5%; x = 9.26.

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E Explanation: The coefficients are called factor betas, factor sensitivities, or factor loadings.