CFA Practice Question

There are 119 practice questions for this study session.

CFA Practice Question

Compared to CAPM, APT ______.

I. allows more risk factors
II. assumes investors are risk-averse
III. assumes a normal distribution of returns
IV. has fewer restrictive assumptions
Correct Answer: I and IV

User Contributed Comments 3

User Comment
baller123 APT allows more risk factors but it doesn't require them. Only one factor can be utilized if desired.
scottharris The CAPM can be considered as a special case of the APT where there is only one risk factor, the market portfolio.
jimmyvo oth capm and apt assume investors are risk-averse and normal distr.
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