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In Terms of the Risk/return Relationship in the APT

Question 67

Multiple Choice

In terms of the risk/return relationship in the APT,


A) only factor risk commands a risk premium in market equilibrium.
B) only systematic risk is related to expected returns.
C) only nonsystematic risk is related to expected returns.
D) only factor risk commands a risk premium in market equilibrium, and only systematic risk is related to expected returns.
E) only factor risk commands a risk premium in market equilibrium, and only nonsystematic risk is related to expected returns.

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