Two Approaches to Defining Factors for Multifactor Models Are to Use

question 90

True/False

Two approaches to defining factors for multifactor models are to use macroeconomic variables or individual characteristics of the securities.

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Definitions:

Optimal Decisions

In finance, decisions that are considered the best under the given circumstances, maximizing benefits while minimizing costs and risks.

Trin Ratio

A technical analysis indicator that compares the number of advancing and declining stocks to the volume of advancing and declining stocks.

Advancing Issues

Refers to the number of stocks whose prices have closed higher than they did in the previous trading session, often used as an indicator of market sentiment.

Framing

Decisions are affected by how choices are described, for example, whether uncertainty is posed as potential gains from a low baseline level, or as losses from a higher baseline value.