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

a. Identification of anticipated changes in production, inflation, and term structure of interest rates as key factors explaining the risk–return relationship.

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

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 risk–return relationship.

 P-69