In a Multifactor APT Model, the Coefficients on the Macro

question 64

Multiple Choice

In a multifactor APT model, the coefficients on the macro factors are often called

• A)systemic risk.
• B)factor sensitivities.
• C)idiosyncratic risk.
• D)factor betas.
• E)factor sensitivities and factor betas.

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Definitions:

Market Interest Rates

The rates of interest charged by lenders on loans or paid on deposits, which fluctuate based on demand, supply, and the overall economic conditions.

Equity Investment

Money that is invested in a company by purchasing shares of that company, typically with the expectation of income from dividends and capital gains as the stock appreciates.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with a fixed dividend.

Corporate Bond

A type of debt security issued by corporations to raise capital, with the obligation to pay back the principal along with interest.