A single-index model uses __________ as a proxy for the systematic risk factor.
A) a market index, such as the S&P 500
B) the current account deficit
C) the growth rate in GNP
D) the unemployment rate.

Question

Quizplus · Accepted Answer

A single-index model uses a market index, such as the S&P 500, as a proxy for the systematic risk factor because it reflects the overall market performance and is considered to capture the market-wide influences on individual securities.

A Single-Index Model Uses __________ as a Proxy for the Systematic