Arbitrage pricing theory states that the only relevant measure of risk is a stock's sensitivity to overall market returns.

Name: Arbitrage pricing theory states that the only relevant measure of risk is a stock's sensitivity to overall market returns.
Brand: Quizplus
Rating: 4.9 (42 reviews)

Question

Quizplus · Accepted Answer

Arbitrage pricing theory takes into account multiple factors, such as macroeconomic variables, to explain a stock's returns. It does not solely rely on a stock's sensitivity to overall market returns as the only measure of risk.

Arbitrage Pricing Theory States That the Only Relevant Measure of Risk