A Factor Is a Variable That

question 31

Multiple Choice

A factor is a variable that:

• A) affects the returns of risky assets in a systematic fashion.
• B) affects the returns of risky assets in an unsystematic fashion.
• C) correlates with risky asset returns in a unsystematic fashion.
• D) does not correlate with the returns of risky assets in an systematic fashion.

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Definitions:

Conditioned Response

A learned reaction to a previously neutral stimulus that has become associated with an unconditioned stimulus.

Conditioned Stimulus

A stimulus that elicits a response only after learning has taken place, typically through association with an unconditioned stimulus.

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without any need for prior learning or conditioning.

Unconditioned Response

An involuntary, inherent reaction to a stimulus, occurring without any learned or conditioned prior history.