What Is the Correct Constraint for Node 2 in the Following

question 14

Multiple Choice

What is the correct constraint for node 2 in the following diagram?

• A) X₁₂ + X₂₃ = 100
• B) X₁₂ -X₂₃ \(\le\)100
• C) -X₁₂ + X₂₃ \(\ge\) -100
• D) X₁₂ -X₂₃ \(\ge\)100

Understand the role and limitations of multifactor models in explaining security returns.

Examine how benchmark errors impact the interpretation of CAPM tests.

Assess the impact of market efficiency on the validity of CAPM.

Understand how survivorship bias and other biases affect CAPM and related studies.

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