One Approach for Using Multifactor Models Is to Use Factors

question 42

Multiple Choice

One approach for using multifactor models is to use factors that capture systematic risk.Which of the following is not a common factor used in this approach?

• A) Unexpected changes in inflation
• B) Consumer confidence
• C) Yield curve shifts
• D) Unexpected changes in real GDP
• E) All of the above are common factors used to measure systematic risk

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Definitions:

Structural Equation Models

A statistical technique that allows for the analysis and estimation of complex relationships among variables, often including both direct and indirect effects.

Variables

Elements, factors, or conditions that can change or vary within an experiment, potentially impacting the outcome.

Laboratory Experiments

Controlled tests or investigations conducted in a specialized environment where variables can be manipulated and outcomes measured precisely.

Partial Correlation

The correlation between two variables with the influence of a third variable statistically controlled for.