In Developing Their Test of a Multifactor Model, Chen, Roll

question 14

Multiple Choice

In developing their test of a multifactor model, Chen, Roll, and Ross hypothesized that __________ might be a proxy for systematic factors.

• A) the monthly growth rate in industrial production
• B) unexpected inflation
• C) expected inflation
• D) the monthly growth rate in industrial production and unexpected inflation
• E) the monthly growth rate in industrial production, unexpected inflation, and expected inflation

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Definitions:

Mark-Up Percentage

A measure of how much the cost of a product is increased to arrive at its selling price, typically to cover overheads and profit.

Mark-Up Percentage

The percentage added to the cost price of products to determine the selling price, intended to cover overhead and profit.

Total Variable Cost

The sum of all variable costs that change in proportion with the level of output or activity.

Total Annual Fixed Costs

The sum of all consistent, non-variable expenses that a company incurs over the course of a year.