The Assumption That the Returns on All Securities Respond to a Single

question 32

Multiple Choice

The assumption that the returns on all securities respond to a single ___ greatly simplifies the task of identifying the tangency portfolio.

• A) common macroeconomic variable
• B) common return
• C) factor loading
• D) common factor

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Definitions:

Business Combination

The process of bringing two or more separate companies together under common control or ownership.

Negative Goodwill

Occurs when the purchase price of a company is less than the fair value of its net assets, often reflecting a bargain purchase.

Acquisition Method

An accounting approach used to consolidate the financial statements of two companies when one acquires control over the other.

Unrealized Gain

An increase in the value of an asset that has not been sold, reflecting a potential profit that is not yet realized.