CFA Practice Question

There are 119 practice questions for this study session.

CFA Practice Question

Consider a macroeconomic 2-factor model. If the surprises in both factors are zero, the return to stock i will be ______.

A. ai
B. ai + εi
C. ai + bi1 + bi2 + εi
Correct Answer: A

This is the stock's expected return.

User Contributed Comments 3

User Comment
nieuwed What happened to the error term? Why isn't the answer B?
b25331 we always expect the error term to be zero, i.e. mean = zero
ashish100 So choice b isn't wrong eithe
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