Which statement is false?

A. The APT does not indicate the number of risk factors.
B. The APT makes the same assumptions as the CAPM.
C. The APT does not assume the market portfolio.

Correct Answer: B

B is false. It makes less strong assumptions than the CAPM.

C is true. APT is more general than CAPM in that it gets to an expected return and beta relationship without the assumption of the market portfolio.