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The following table provides information for three portfolios whose returns are generated by the four - factor APT model: The risk-free rate has a value of 3%. Which portfolio has the highest return? If the actual return of all three portfolios is 7%, which one(s) would you buy according to the APT model? Would your answer change if you use the CAPM model instead? Explain. The risk-free rate has a value of 3%. Which portfolio has the highest return? If the actual return of all three portfolios is 7%, which one(s) would you buy according to the APT model? Would your answer change if you use the CAPM model instead? Explain. (10 marks) Discuss why the APT model is favoured by some investors relative to the CAPM? Explain when would the single factor APT model become the CAPM