One Limitation on Factor Models Is the Problem That a Good

question 26

Multiple Choice

One limitation on factor models is the problem that a good factor model in one period

• A) may not be a good factor model in equilibrium
• B) may be a good factor model when factors are numerous
• C) may be not be appropriate for stock return series where price series do not follow a random walk
• D) may not be a good in another period when conditions such as oil prices change due to economic innovations

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Definitions:

Finished Goods

Items that have finished being manufactured and are prepared for purchase by consumers.

Inventory

The raw materials, work-in-progress, and finished goods that a company holds for the purpose of sale in the future.

November

The 11th month in the Gregorian calendar system.

Cash Collections

The process of gathering and processing payments received from customers, especially in terms of accounts receivable management.