- CFA Exams
- CFA Level I Exam
- Study Session 16. Portfolio Management (1)
- Reading 44. Using Multifactor Models
- Subject 2. Factors and types of multifactor models

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**CFA Practice Question**

Assume that a stock?'s returns are affected by two factors: surprises in inflation and surprises in GDP growth:
R = 8% -?? 0.5 F

B. 8.75%

C. Not enough information. Cannot calculate.

_{infl}+ 1.25F_{GDP}+ εThe expected return on the stock is ______.

A. 8%

B. 8.75%

C. Not enough information. Cannot calculate.

Correct Answer: A

The expected return is the value of the intercept in the equation.

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