Tests of Multifactor Models Indicate

question 55

Multiple Choice

Tests of multifactor models indicate

• A)the single-factor model has better explanatory power in estimating security returns.
• B)macroeconomic variables have no explanatory power in estimating security returns.
• C)it may be possible to hedge some economic factors that affect future consumption risk with appropriate portfolios.
• D)multifactor models do not work.
• E)none of the above is true.

---

Definitions:

Methane

A potent greenhouse gas with a chemical formula CH4, produced by anaerobic decomposition of organic materials and other processes.

Ammonia

A compound of nitrogen and hydrogen with the formula NH3, known for its pungent smell and used in various industrial processes.

Valles Marineris

A vast canyon system on the planet Mars, stretching about 4,000 kilometers and known as one of the largest canyon systems in the Solar System.

Kilometers

A unit of measurement equal to 1,000 meters, commonly used to measure distances between geographical locations.