Which of the following is an example of a multifactor model explaining expected asset returns:I.

The arbitrage pricing theory is a multifactor model for explaining asset returns as it can be used to incorporate multiple factors, for example inflation, GDP growth rate, employment, interest rates etc to explain asset returns. Choice 'a' is the correct answer.

The single index model, as the name implies, uses only a single factor, and so does the CAPM which uses excess returns to explain an individual security's returns. Neither of these are multi-factor models.