In a Factor Model Any Portion of a Security's Return

question 25

Multiple Choice

In a factor model any portion of a security's return unexplained by the model is assumed to be _______ with unique elements of returns on other securities.

• A) directly correlated
• B) indirectly correlated
• C) uncorrelated
• D) somewhat correlated

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Definitions:

Population Mean

The mean value of all the elements within a population.

Sample Size

The number of observations or data points used in a study or experiment.

Confidence Level

The probability with which a statistical estimate can be expected to contain the true parameter value.

Confidence Interval

A band of values calculated from sample statistics, expected to enclose the value of a yet-to-be-identified population parameter.