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Basic Question 1 of 2
The actual information ratios, after uncertainty of skill is accounted for, are ______ predicted by an objective application of the original form of the fundamental law.
B. on average about the same as those
C. substantially higher than
A. substantially lower than
B. on average about the same as those
C. substantially higher than
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Learning Outcome Statements
describe arbitrage pricing theory (APT), including its underlying assumptions and its relation to multifactor models;
define arbitrage opportunity and determine whether an arbitrage opportunity exists;
calculate the expected return on an asset given an asset's factor sensitivities and the factor risk premiums;
CFA® 2025 Level II Curriculum, Volume 5, Module 38.