The APT approach assumes stock returns are related to the factors of
A) market returns only.
B) market returns and GDP.
C) GDP and CPI.
D) no specific variable.

Question

Quizplus · Accepted Answer

The Arbitrage Pricing Theory (APT) posits that stock returns can be predicted based on various macroeconomic factors or theoretical market indices, but it does not specify any particular variable or factor as being essential. Instead, it allows for multiple factors to influence returns, which can vary from model to model.

The APT Approach Assumes Stock Returns Are Related to the Factors