What Are the Three Major Components of the Grinold Kroner

question 38

Multiple Choice

What are the three major components of the Grinold Kroner model?

• A) Net profit margin, total asset turnover and equity multiplier
• B) Market risk premium, SMB and HML
• C) Unemployment, inflation and growth in GDP
• D) Income return, earnings growth and repricing

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Definitions:

Hunting Stand

A structure used by hunters to elevate themselves above the ground to improve visibility and shooting range on their prey.

Diversification

Practice of reducing risk by allocating resources to a variety of activities whose outcomes are not closely related.

Risk-Free Asset

An investment that is expected to return its original value without any loss and with a certain rate of interest.

Positively Correlated

A relationship between two variables where both variables move in the same direction, meaning that as one variable increases, the other also increases, and vice versa.