One approach for using multifactor models is to use factors that capture systematic risk. Which of the following is NOT a common factor used in this approach?
A) unexpected changes in inflation
B) consumer confidence
C) yield curve shifts
D) unexpected changes in real GDP
E) All of these are correct.

Question

Quizplus · Accepted Answer

All the options listed (unexpected changes in inflation, consumer confidence, yield curve shifts, and unexpected changes in real GDP) are indeed factors that can capture systematic risk in multifactor models. These factors are considered because they have widespread effects on the financial markets and can influence the performance of various assets.

One Approach for Using Multifactor Models Is to Use Factors