Assume a One Factor Model for a Security's Return Is

question 6

Multiple Choice

Assume a one factor model for a security's return is 10% - 1.5 (CPI) . For the year, the CPI's growth rate was 5%, and security's actual return was 8%. The security's unique return was

• A) 2.5%.
• B) -2.5%.
• C) 8%.
• D) 5.5%.

---

Definitions:

Total Depreciable Cost

The total depreciable cost is the cost of a fixed asset minus its salvage value, representing the total amount that can be depreciated over the asset's useful life.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate revenue.

Generate Sales

The process of creating revenue for a business through the selling of goods or services.

Asset Replacement

A process where a company replaces old assets with new ones to maintain or enhance productivity.