In a Portfolio of Risky Assets the Response to a Factor,F_i,can

question 3

Multiple Choice

In a portfolio of risky assets the response to a factor,F_i,can easily be determined by:

• A) summing the weighted β_i s and multiplying by the innovation in F_i.
• B) summing the F_i s.
• C) adding the average weighted expected returns.
• D) Summing the weighted random errors.

---

Definitions:

Machinery

Mechanical devices or equipment that perform various tasks on a job site, in a manufacturing or production environment.

Trade-In Allowance

The amount credited to a buyer for the value of a traded item towards the purchase of a new item.

Accumulated Depreciation

The aggregate depreciation cost allocated to a fixed asset since its initial purchase.

Commercial Substance

A financial concept indicating that a transaction significantly changes the economic position or cash flows of the entity.