Which of the following might be used as a factor in an APT factor model?
A) The risk-free rate
B) Expected inflation
C) Unanticipated deviations from expected inflation
D) Loss by fire at a company's manufacturing plant

Question

Quizplus · Accepted Answer

In an Arbitrage Pricing Theory (APT) model, factors are typically systematic risks that affect many assets, such as unanticipated deviations from expected inflation, rather than specific events like a fire at a company's plant.

Which of the Following Might Be Used as a Factor