- CFA Exams
- CFA Level I Exam
- Study Session 16. Portfolio Management (1)
- Reading 44. Using Multifactor Models
- Subject 1. Arbitrage pricing theory

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**CFA Practice Question**

Which is not a major assumption in the Arbitrage Pricing Theory (APT)?

B. A market portfolio which contains all risky assets and which is mean-variance efficient.

C. The stochastic process generating asset returns can be represented as a K factor model.

A. Capital markets are perfectly competitive.

B. A market portfolio which contains all risky assets and which is mean-variance efficient.

C. The stochastic process generating asset returns can be represented as a K factor model.

Correct Answer: B

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