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Unlike the capital asset pricing model, the arbitrage pricing theory requires only the following assumption(s): 1) A quadratric utility function. 2) Normally distributed returns. 3)
Unlike the capital asset pricing model, the arbitrage pricing theory requires only the following assumption(s): 1) A quadratric utility function. 2) Normally distributed returns. 3) The stochastic process generating asset returns can be represented by a factor model. 4) A mean-variance efficient market portfolio consisting of all risky assets. 5) All of the above
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