Consider the Following List of Risk Factors: (1) Monthly Growth

question 5

Multiple Choice

Consider the following list of risk factors: (1) monthly growth in industrial production
(2) return on high book to market value portfolio minus return on low book to market value portfolio
(3) change in inflation
(4) excess return on stock market portfolio
(5) return on small cap portfolio minus return on big cap portfolio
(6) unanticipated change in bond credit spread
Which of the factors would you use to develop a microeconomic-based risk factor model?

• A) (1), (2), and (3)
• B) (1), (3), and (5)
• C) (2), (4), and (5)
• D) (1), (3), and (6)
• E) (4), (5), and (6)

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Definitions:

Conflicting Wishes

Desires or hopes that are in opposition to one another, making it difficult to satisfy both.

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refers to the extent to which a test, instrument, or research study accurately measures what it intends to measure.

Rorschach Test

A psychological test in which subjects' perceptions of inkblots are recorded and then analyzed using psychological interpretation.

Validity

The extent to which a test, tool, or study accurately measures or reflects what it intends to measure.