CFA Practice Question

There are 255 practice questions for this topic.

CFA Practice Question

In the macroeconomic factor models, ______.

I. the "b's" are very similar to betas in the market model
II. a one percentage point surprise in factor 1 will contribute bi1 percentage points to the return to stock i
III. the error term εi represents unsystematic risk related to firm-specific events
IV. the mean of the error term εi is zero
V. different assets have different factor sensitivities
Correct Answer: I, II, III, IV and V

User Contributed Comments 1

User Comment
alyl21 1) market model deals with sysmtematic risk. Macro risk factors are also systemmatic, so similar
2) easy
3) easy
4) error term should be 0 given large sample size
5) easy
You need to log in first to add your comment.