In the Single-Index Model Represented by the Equation Ri= E(r_i)

question 15

Multiple Choice

In the single-index model represented by the equation ri= E(r_i) + β_iF + e_i,the term e_i represents

• A) the impact of unanticipated macroeconomic events on security i's return.
• B) the impact of unanticipated firm-specific events on security i's return.
• C) the impact of anticipated macroeconomic events on security i's return.
• D) the impact of anticipated firm-specific events on security i's return.
• E) the impact of changes in the market on security i's return.

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Definitions:

Need for Cognition

A psychological term referring to an individual's tendency to engage in and enjoy thinking, analysis, and problem-solving.

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Discourse or discussion characterized by careful consideration, reflection, and respect for differing views.

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The process of finding solutions to difficult or complex problems, often involving critical thinking and logic.