One of the main problems with the arbitrage pricing theory is
a. Its use of several factors instead of a single market index to explain the risk-return relationship
b. The introduction of non-systematic risk as a key factor in the risk-return relationship
c. That the APT requires an even larger number of unrealistic assumptions than the CAPM
D. The model fails to identify the key macro-economic variables in the risk-return relationship
Answer: D. The model fails to identify the key macro-economic variables in the risk-return relationship