In a multifactor model, time horizon risk represents
A) unanticipated changes in the level of overall business activity.
B) unanticipated changes in investors' desired time to receive payouts.
C) unanticipated changes in short-term and long-term inflation rates.
D) unanticipated changes in the willingness of investors to take on investment risk.
E) None of these are correct.

Question

Quizplus · Accepted Answer

Time horizon risk in a multifactor model represents the possibility that the investor's desired time to receive payouts may change unexpectedly. This can have an impact on the selection and performance of investments in a portfolio. The other options refer to different types of risk that are not related to time horizon risk.

In a Multifactor Model, Time Horizon Risk Represents