[amp_mcq option1=”arbitrage pricing theory” option2=”arbitrage risk theory” option3=”arbitrage dividend theory” option4=”arbitrage market theory” correct=”option1″]
The correct answer is: A. arbitrage pricing theory.
Arbitrage pricing theory (APT) is a general equilibrium asset pricing model that states that the expected return of a security is determined by a number of factors, including the risk-free rate, the market risk premium, and the beta of the security. APT is a more general model than the capital asset pricing model (CAPM), which only considers the risk-free rate and the beta of the security.
B. arbitrage risk theory is a theory that states that the risk of an asset is determined by the potential for arbitrage opportunities. An arbitrage opportunity is a situation in which an investor can buy an asset and sell it at a higher price, or vice versa.
C. arbitrage dividend theory is a theory that states that the value of a stock is determined by the present value of its future dividends.
D. arbitrage market theory is a theory that states that the market is efficient and that prices reflect all available information.