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The feature of arbitrage pricing theory (APT) that offers the greatest potential advantage over the...

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Accounting

The feature of arbitrage pricing theory (APT) that offers the greatest potential advantage over the simple CAPM is the:

A- Superior measurement of the risk-free rate of return over historical time periods.

B- Identification of anticipated changes in production, inflation, and term structure of interest rates as key factors explaining the riskreturn relationship.

C- Variability of coefficients of sensitivity to the APT factors for a given asset over time.

D- Use of several factors instead of a single market index to explain the riskreturn relationship.

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