The General Purpose of Identifying Multiple Factors in the APT

Multiple Choice

The general purpose of identifying multiple factors in the APT model is to:

A) identify the top three factors that have the largest impact on the market rate of return.
B) identify and eliminate all systematic risks from a portfolio.
C) identify the quantity of each factor that is needed to reduce a portfolio's risk,as measured by beta,to a level equal to that of the overall market.
D) reduce the unsystematic risk to a level where the unsystematic risk of one security is unrelated to the unsystematic risk of any other security.
E) reduce the slope of the security market line,thereby reducing portfolio risk.