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Commerce · Q743

Financial Management

Graduate and Post Graduate · Commerce · question 743

Q743

In arbitrage pricing theory, higher required rate of return is usually paid on stock

A.
higher market risk
B.
higher dividend
Answer
C.
lower dividend
D.
lower market risk

Answer: Option B

Solution

Answer: Option B
Solution:
In arbitrage pricing theory, higher required rate of return and higher dividend is usually paid on stock. The Arbitrage Pricing Theory (APT) is a theory of asset pricing that holds that an asset’s returns can be forecasted with the linear relationship of an asset’s expected returns and the macroeconomic factors that affect the asset’s risk.