In a Multifactor Model, Time Horizon Risk Represents

question 137

Multiple Choice

In a multifactor model, time horizon risk represents

• A) unanticipated changes in the level of overall business activity.
• B) unanticipated changes in investors' desired time to receive payouts.
• C) unanticipated changes in short-term and long-term inflation rates.
• D) unanticipated changes in the willingness of investors to take on investment risk.
• E) None of these are correct.

---

Definitions:

Progressive

A taxation system in which the tax rate increases as the taxable amount increases, often applied to income tax.

Regressive

In taxation, regressive describes a tax that takes a smaller percentage of income as the income increases, often placing more burden on lower-income individuals.

Average Tax Rate

The average tax rate is the percentage of total income paid in taxes, calculated by dividing the total amount of taxes paid by the total income before taxes.

Taxable Income

The portion of an individual's or corporation's income that is subject to income tax after allowances, exemptions, and deductions.