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Section B (2 Mark)
The feature of the APT that offers the greatest potential advantage over the CAPM is the ______________.
use of several factors instead of a single market index to explain the risk-return relationship
identification of anticipated changes in production, inflation and term structure as key factors in explaining the risk-return relationship
superior measurement of the risk-free rate of return over historical time periods
variability of coefficients of sensitivity to the APT factors for a given asset over time
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