________ is a measure of the responsiveness of a security's returns to a particular common factor.
A) Factor loading
B) Regression analysis
C) Factor risk
D) Sector factor

Question

Quizplus · Accepted Answer

Factor loading is a statistical measure used in factor analysis to determine the strength of the relationship between each variable and the underlying common factor. In finance, factor loading is used to measure the sensitivity of a security's returns to a particular common factor, such as the overall market or a specific sector. The higher the factor loading, the more responsive the security's returns are to changes in the common factor. Therefore, factor loading is a measure of a security's exposure to systematic risk or factor risk.

________ Is a Measure of the Responsiveness of a Security's