The feature of 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.