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

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Definitions:

Stimulus Motives

Internal drives that prompt an organism to seek stimulation or respond to changes in the environment.

Self-Actualization

The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.

Drive-Reduction Theory

A theory in psychology that explains motivation as being rooted in the desire to reduce internal tensions caused by unmet biological needs.

Cognitive Developmental Theory

A psychological theory that suggests how children acquire knowledge and understanding of the world around them, often associated with Jean Piaget.