- CFA Exams
- CFA Exam: Level II 2021
- Study Session 16. Portfolio Management (1)
- Reading 44. Using Multifactor Models
- Subject 2. Factors and types of multifactor models
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 Finfl + 1.25FGDP + ε
B. 8.75%
C. Not enough information. Cannot calculate.
The 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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