In Their Multifactor Model,Chen,Roll,and Ross Found

question 13

Multiple Choice

In their multifactor model,Chen,Roll,and Ross found

• A) that two market indexes,the equally weighted NYSE and the value weighted NYSE,were not significant predictors of security returns.
• B) that the value weighted NYSE index had the incorrect sign,implying a negative market risk premium.
• C) expected changes in inflation predicted security returns.
• D) a and b.
• E) a,b,and c.

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Definitions:

Pro Forma Cash Flows

Projected cash flows based on assumptions and estimates, used for planning and financial analysis.

Required Rate of Return

The minimum annual percentage earnings necessary for an investment to be considered acceptable, taking into account its risk and the time value of money.

Financial Merger

A financial merger is a consolidation of two or more companies, primarily for financial gains, improving capital, or enhancing corporate strength through combined resources.

Columbia Pictures

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