________ postulates that a security's expected return is influenced by a variety of factors, as opposed to just the single market index.

Question

Quizplus · Accepted Answer

The arbitrage pricing theory model postulates that a security's expected return is influenced by multiple factors, such as interest rates, macroeconomic variables, and industry-specific factors, rather than just the single market index used in the CAPM. The APT model assumes that investors are risk-averse and attempt to maximize their wealth. It takes into account various sources of risk and their impact on asset pricing, rather than just systematic risk as in the CAPM.

________ Postulates That a Security's Expected Return Is Influenced by a Variety