Match the Term with Its Definition

question 11

Multiple Choice

Match the term with its definition.
-An interconnected system of relationships with other people

• A)board of directors
• B)general partner
• C)legal entity
• D)limited liability company
• E)limited partners
• F)nonprofit corporation
• G)partnership agreement
• H)sole proprietorship
• I)social network

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Definitions:

Security Characteristic Line

A line used in finance to represent the relation between the expected return of a security and the return of the market.

Single-Index Model

A financial model that describes the return of a security or portfolio as a linear function of the return of a single market index, accounting for both the market return and idiosyncratic factors.

Excess Returns

Returns on an investment that exceed the benchmark or risk-free return, indicating the extra value gained by taking on risk.

Index Model

A financial model that describes the return of a stock as a function of the return of a market index, plus residual factors unique to that stock.