Rather Than Relying on the Efficiency of a Single Portfolio

question 27

Multiple Choice

Rather than relying on the efficiency of a single portfolio (such as the market) ,multifactor models rely on ________ that an efficient portfolio can be constructed from a collection of well-diversified portfolios or factors.

• A) the stronger condition
• B) the neutral condition
• C) the weaker condition
• D) the unbiased condition

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Definitions:

Effective Rate

The actual interest rate of an investment or loan, taking into account the compounding of interest.

Effective Rate

The real rate of interest earned or paid on an investment or loan in a specified period, considering compounding.

Monthly Compounded

Refers to the process of adding interest to the principal sum of a loan or deposit, recalculated on a monthly basis. This is a repeat of Compounded Monthly with a new definition focusing on recalculating interest increase.

Compounded Monthly

Compounded monthly refers to the process where the interest earned on an investment is added to the principal sum each month, causing the principal amount to grow at an increasing rate.