Solved

Consider the Single-Factor APT

Question 10

Multiple Choice

Consider the single-factor APT. Stocks A and B have expected returns of 15% and 18%, respectively. The risk-free rate of return is 6%. Stock B has a beta of 1.0. If arbitrage opportunities are ruled out, stock A has a beta of


A) 0.67.
B) 1.00.
C) 1.30.
D) 1.69.
E) 0.75.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q1: Consider the one-factor APT. Assume that two

Q12: Black argues that past risk premiums on

Q12: <sup> </sup>A zero-investment portfolio with a positive

Q13: <sup> </sup>The feature of the APT that

Q14: Consider the single factor APT. Portfolios A

Q40: In the APT model, what is the

Q51: The _ provides an unequivocal statement on

Q53: To take advantage of an arbitrage opportunity,

Q59: In the APT model, what is the

Q74: An arbitrage opportunity exists if an investor