The betas along with the factors in the APT adjust the expected return for:
A) calculation errors.
B) unsystematic risks.
C) spurious correlations of factors.
D) differences between actual and expected levels of factors.

Question

Quizplus · Accepted Answer

The betas in the Arbitrage Pricing Theory (APT) adjust the expected return for differences between actual and expected levels of factors, reflecting how sensitive the asset's returns are to changes in these factors.

The Betas Along with the Factors in the APT Adjust