The Feature of the APT That Offers the Greatest Potential

Multiple Choice

The feature of the APT that offers the greatest potential advantage over the CAPM is the

A) use of several factors instead of a single market index to explain the risk-return relationship.
B) identification of anticipated changes in production, inflation, and term structure as key factors in explaining the risk-return relationship.
C) superior measurement of the risk-free rate of return over historical time periods.
D) variability of coefficients of sensitivity to the APT factors for a given asset over time.
E) None of the options are correct.