In developing the APT,Ross assumed that uncertainty in asset returns was a result of
A)a common macroeconomic factor
B)firm-specific factors
C)pricing error
D)neither A nor B
E)both A and B

Question

Quizplus · Accepted Answer

Ross assumed that uncertainty in asset returns was a result of both common macroeconomic factors and firm-specific factors. This is the basis for the development of the APT (Arbitrage Pricing Theory).

In Developing the APT,Ross Assumed That Uncertainty in Asset Returns