Consider the Following List of Risk Factors: 1

question 96

Multiple Choice

Consider the following list of risk factors: 1. monthly growth in industrial production
2. return on high book to market value portfolio minus return on low book to market value portfolio
3. change in inflation
4. excess return on stock market portfolio
5. return on small cap portfolio minus return on big cap portfolio
6. unanticipated change in bond credit spread
Which of the following factors would you use to develop a macroeconomic-based risk factor model?

• A) 1, 2, and 3.
• B) 1, 3, and 5.
• C) 2, 4, and 5.
• D) 1, 3, and 6.
• E) 4, 5, and 6.

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Definitions:

Salaries

Payments made to employees for their services over a specified period.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; also known as the bottom line.

Income and Losses

Represents the financial performance of a business, where income refers to the earnings and losses indicate the expenses exceeding earnings over a period.

Original Investments

The initial amount of money put into purchasing assets or starting a venture, setting the foundation for future growth or income.