Consider the Following List of Risk Factors: 1

question 80

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 microeconomic-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

---

Definitions:

Markup

The difference between the cost of a good or service and its selling price, represented as a percentage of the cost.

Inventory Transfers

The movement of goods from one location to another, which can involve changes in ownership within the same company or between different entities.

Effective Income Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing total tax expense by taxable income.

Accrual-based Net Income

The measure of a company's financial performance that includes all earned revenues and incurred expenses, recognized as they are earned or incurred, rather than when cash is received or paid.