Black Argues That Past Risk Premiums on Firm-Characteristic Variables, Such

question 12

Multiple Choice

Black argues that past risk premiums on firm-characteristic variables, such as those described by Fama and French, are problematic because

• A) they may result from data snooping.
• B) they are sources of systematic risk.
• C) they can be explained by security characteristic lines.
• D) they are more appropriate for a single-factor model.
• E) they are macroeconomic factors.

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Definitions:

Bipolar Disorders

A mental health condition characterized by extreme mood swings that include emotional highs (mania or hypomania) and lows (depression).

Lithium Carbonate

A chemical compound used as a mood-stabilizing drug in the treatment of bipolar disorder and other mental health conditions.

Nausea

A feeling of discomfort in the stomach, often accompanied by an urge to vomit.

Acute Mania

A phase of bipolar disorder characterized by an excessively elevated or irritable mood, hyperactivity, and impulsive behavior.