An Affine Factor Model Is One in Which Multiple Factors $X$

question 12

Multiple Choice

An affine factor model is one in which multiple factors $X$ may be present. Which of the following is not true of an affine factor model.

• A) The drift \(\mu ( X )\) will be linear in \(X\) .
• B) The volatility \(\sigma ( X )\) will be linear in \(X\) .
• C) The yield \(R ( X )\) will be linear in \(X\) .
• D) The logarithm of the price scaled by maturity is the yield.

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Definitions:

Employers

Individuals or organizations that hire and pay people to work for them.

Communication Medium

The form in which a message is presented; the three primary categories of media are oral, written, and visual.

Potential Distractions

Elements or factors that can divert attention away from the task at hand, reducing focus and productivity.

Audience Preference

The tastes, interests, and behaviors that characterize a particular group of people an author or speaker aims to reach.