Which of the following statements is incorrect about The Arbitrage Pricing theory (APT) 1. A common factor is an economic variable for portfolio return that acts as a proxy for an economic variable) that has a syficant efect on the return of a subset of securities II. The factors can be thought of as proxes for new information about macroeconomic variables, such as industrial production interest rates, stock price ve The common factors affect returns by changing discount rates or future cash flows or both