Which of the following must be done to test the multifactor CAPM or the APT?
I.specify the risk factors
II.identify portfolios that hedge the risk factors
III.test the explanatory power of hedge portfolios
IV.test the risk premiums of hedge portfolios
A) I and II
B) II,and IV
C) II,and III
D) I,II,and IV
E) I,II,III,and IV
Correct Answer:
Verified
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A) establishing
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A) the
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