Compared to the CAPM, the APT Has an Advantage: the Model

Multiple Choice

Compared to the CAPM, the APT has an advantage: the model adds factors until the unsystematic risk of any security is uncorrelated with the unsystematic risk of every other security.

A) As a result, unsystematic risk steadily falls as the number of securities in the portfolio
Increases.
B) systematic risks do not decrease as the number of securities in the portfolio increases.
C) A and B are both correct.
D) A and B are both incorrect.
E) Only B separates the APT from the CAPM.