The most significant conceptual difference between the arbitrage pricing theory (APT) and the capital asset pricing model (CAPM) is that the CAPM ________.
A) places less emphasis on market risk
B) recognizes multiple unsystematic risk factors
C) recognizes only one systematic risk factor
D) recognizes multiple systematic risk factors

Question

Quizplus · Accepted Answer

The most significant conceptual difference between APT and CAPM is that APT recognizes multiple systematic risk factors while CAPM only recognizes one systematic risk factor (market risk).

The Most Significant Conceptual Difference Between the Arbitrage Pricing Theory