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Category > Business & Finance Posted 13 Jul 2017 My Price 11.00

Assume that both Portfolios A and B

Assume that both Portfolios A and B are well diversified, that E(rA) = 12%, and E(rB) = 9%. If the economy has only one factor, and βA = 1.2, whereas βB= .8, what must be the risk-free rate?

If the APT is to be a useful theory, the number of systematic factors in the economy must be small. Why?

The APT itself does not provide guidance concerning the factors that one might expect to determine risk premiums. How should researchers decide which factors to investigate? Why, for example, is industrial production a reasonable factor to test for a risk premium?

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Status NEW Posted 13 Jul 2017 04:07 PM My Price 11.00

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