To Calculate the Zero-Factor from a Multiple-Factor Model Developed Portfolio

question 47

Multiple Choice

To calculate the zero-factor from a multiple-factor model developed portfolio, the resulting zero-factor

• A) will be 0.
• B) is a weighted average based on the factor covariances.
• C) is a weighted average based on the security proportions.
• D) is not included.

---

Definitions:

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenditures to the appropriate period.

Prepaid Expenses

Prepaid expenses are costs for goods or services that are paid in advance of the receipt or use, recognized as assets on a balance sheet.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, representing the wear and tear, or expiry of the asset's practical lifespan.

Billed

Billed refers to the issuing of invoices to customers for products sold or services rendered, indicating the amount due for payment.