Multifactor Models Seek to Improve the Performance of the Single-Index

question 19

Multiple Choice

Multifactor models seek to improve the performance of the single-index model by

• A)modeling the systematic component of firm returns in greater detail.
• B)incorporating firm-specific components into the pricing model.
• C)allowing for multiple economic factors to have differential effects.
• D)All of the options are correct.

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Definitions:

Disjunctive

Relating to a logical disjunction, characterized by the use of "or" in presenting alternatives or options where at least one must be true.

Disjunctive

Pertaining to a logical relation involving a choice between two clauses where at least one must be true.

Either Or

A logical proposition or choice implying that one out of two possible options must be selected or is true, excluding simultaneous truth or selection of both.

Disjunctive Conclusion

A logical inference which results from a disjunction in which at least one of the stated alternatives must be true.