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

question 43

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.
• E) None of the options are correct.