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Arbitrage pricing theorem

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Reference no: EM133110147

The Arbitrage Pricing Theorem states that:

a)If arbitrage opportunities do not exist then the returns of all assets are driven by a set of common factors.

b)Arbitrage portfolios are impossible.

c)The expected return of any arbitrage portfolio is zero.

d)The common constant factor is the risk-free asset.

Reference no: EM133110147

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