In a Factor Model, the Return on a Stock in a Particular

question 81

Multiple Choice

In a factor model, the return on a stock in a particular period will be related to

• A) firm-specific events.
• B) macroeconomic events.
• C) the error term.
• D) both firm-specific events and macroeconomic events.
• E) neither firm-specific events nor macroeconomic events.

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Definitions:

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and taxes.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption or wear and tear.

Investment

This is the allocation of resources, usually money, in the expectation of generating an income or profit.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.