In Developing Their Test of a Multifactor Model,Chen,Roll,and Ross Hypothesized

question 9

Multiple Choice

In developing their test of a multifactor model,Chen,Roll,and Ross hypothesized that __________ for systematic factors.

• A) the monthly growth rate in industrial production might be a proxy
• B) unexpected inflation might be a proxy
• C) expected inflation might be a proxy
• D) a and b
• E) a,b,and c

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Definitions:

Political Risk Insurance

A type of insurance that provides financial protection to investors, firms, and projects from losses due to political events or actions in a given country.

Force Majeure Clause

A contract provision that frees parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs.

Commercial Arbitration

A form of arbitration to resolve business disputes outside the courts, where the parties involved appoint an arbitrator(s).