Question #33
Reading: Reading 36 Using Multifactor Models
PDF File: Reading 36 Using Multifactor Models.pdf
Page: 16
Status: Correct
Correct Answer: B
Question
The Arbitrage Pricing Theory (APT) has all of the following characteristics EXCEPT it:
Answer Choices:
A. is an equilibrium pricing model
B. assumes that asset returns are described by a factor model
C. assumes that arbitrage opportunities are available to investors
Explanation
The APT assumes that no arbitrage opportunities are available to investors.