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Basic Question 0 of 5
Consider a macroeconomic 2-factor model. If the surprises in both factors are zero, the return to stock i will be ______.
B. ai + εi
C. ai + bi1 + bi2 + εi
A. ai
B. ai + εi
C. ai + bi1 + bi2 + εi
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 |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe and compare macroeconomic factor models, fundamental factor models, and statistical factor models;
CFA® 2025 Level II Curriculum, Volume 5, Module 40.