Arbitrage Pricing Theory (APT) specifies the exact number of risk factors and their identity.

Name: Arbitrage Pricing Theory (APT) specifies the exact number of risk factors and their identity.
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Quizplus · Accepted Answer

APT does not specify an exact number of risk factors or their identity. Instead, it allows for the possibility of multiple factors influencing the returns of financial assets, with the specific factors and their impact on returns being determined empirically through statistical analysis.

Arbitrage Pricing Theory (APT) Specifies the Exact Number of Risk