Risk is defined relative to a stock's sensitivity to market factors alone under the arbitrage pricing theory.

Name: Risk is defined relative to a stock's sensitivity to market factors alone under the arbitrage pricing theory.
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Under the arbitrage pricing theory (APT), risk is defined relative to multiple factors, not just market factors alone. APT suggests that asset returns can be predicted using the relationship between the asset and several macroeconomic factors.

Risk Is Defined Relative to a Stock's Sensitivity to Market