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NEW QUESTION: 1
Samuel Edson, CFA, portfolio manager for Driver Associates, employs a multifactor model to evaluate individual stocks and portfolios. Edson examines several possible risk factors and finds two that are priced in the marketplace. These two factors are investor sentiment (IS) risk and business cycle (BC) risk. Edson manages three equity portfolios (A, Bt and Q and derives the following relationships for each portfolio, as well as for the S&P 500 stock market index:
Portfolios A and B are well-diversified, while C is a less than fully diversified, value-oriented portfolio. FJS is the surprise in investor sentiment, and FBC is the surprise in the business cycle. Surprises in the risk factors are defined as the difference between the actual value and the predicted value.
Exhibit 1 provides data for the actual and predicted values for the investor sentiment and business cycle risk factors.
Driver Associates uses a two-factor Arbitrage Pricing Model to develop equilibrium expected returns for individual stocks and portfolios:
E(R) = risk free rate + , + , (8)
where:
At the time of Edson's analysis, the long-term government bond yield was 5%.
Equations (1) through (4) are examples of:
A. fundamental factor models.
B. statistical factor models.
C. macroeconomic factor models.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
The models in equations 1 through 4 employ factors derived from macioeconomic variables. (Study Session 18, LOS 64.j)
NEW QUESTION: 2
When questions arise on the appropriateness of the going concern assumption made by management and the existence of material misstatements which was not adequately disclosed in the financial statements would lead to auditor's-
A. Unmodified opinion
B. Unmodified opinion (but have to include an emphasis of matter paragraph in the auditor's report)
C. Disclaimer of opinion
D. Qualified opinion
Answer: D
NEW QUESTION: 3
A particular role needs edit on contacts, view, edit and delete on contracts and only view on accounts.
Where can the administrator make the change?
A. Organization wide default
B. User record
C. Public group
D. Sharing role
E. Profile
Answer: E