In a Microeconomic (Or Characteristic)-Based Risk Factor Model, the Following

question 42

Multiple Choice

In a microeconomic (or characteristic) -based risk factor model, the following factor would be one of many appropriate factors:

• A) confidence risk.
• B) maturity risk.
• C) expected inflation risk.
• D) call risk.
• E) return difference between small capitalization and large capitalization stocks.

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Definitions:

Unlevered Firm

A company that operates without using borrowed money, relying solely on its own equity for financing.

After-Tax Net

The remaining income of a business or investment after all taxes have been deducted.

Unlevered Cost

Refers to the cost a company would incur without the benefit or cost of debt financing.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity and preferred equity, which is used to finance its overall operations and growth.