The Table Below Provides Factor Risk Sensitivities and Factor Risk

question 11

Multiple Choice

The table below provides factor risk sensitivities and factor risk premia for a three factor model for a particular asset where factor 1 is MP the growth rate in US industrial production, factor 2 is UI the difference between actual and expected inflation, and factor 3 is UPR the unanticipated change in bond credit spread. Calculate the expected excess return for the asset.

• A) 12.32%
• B) 9.32%
• C) 4.56%
• D) 6.32%
• E) 8.02%

---

Definitions:

Tangible Objects

Physical items that can be seen, touched, and measured, as opposed to abstract concepts or virtual items.

Organizational Culture

A set of shared values, beliefs, and practices that characterizes an organization and guides its members' behaviors.

Cultural Values

The core principles and ideals upon which an entire community exists and functions, shaping behavior and setting standards for what is important.

Subcultures

Groups within a larger culture that have their own distinct values, behaviors, and traditions.