Which of the Following Must Be Done to Test the Multifactor

question 16

Multiple Choice

Which of the following must be done to test the multifactor CAPM or the APT?I) Specify the risk factorsII) Identify portfolios that hedge the risk factorsIII) Test the explanatory power of hedge portfoliosIV) Test the risk premiums of hedge portfolios

• A) I and II
• B) II and IV
• C) II and III
• D) I, II, and IV
• E) I, II, III, and IV

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Definitions:

Psychographic Segmentation

The process of dividing a market into segments based on consumer personalities, values, attitudes, interests, or lifestyles.

U.S. Census Bureau

A principal agency of the U.S. Federal Statistical System responsible for producing data about the American people and economy.

Population Shifts

Changes in the size, distribution, and composition of a population over time, affecting various aspects of society and economy.

House of Representatives

One of the two chambers in the legislative branch of many democratic governments, responsible for making and passing laws.