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Samuel Edson, CFA, portfolio manager for Driver Associates, employs a multifactor model to evaluate individual stocks and portfolios. Edson examines several possible risk factors and finds two that are priced in the marketplace. These two factors are investor sentiment (IS) risk and business cycle (BC) risk. Edson manages three equity portfolios (A, Bt and Q and derives the following relationships for each portfolio, as well as for the S&P 500 stock market index:
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Portfolios A and B are well-diversified, while C is a less than fully diversified, value-oriented portfolio. FJS is the surprise in investor sentiment, and FBC is the surprise in the business cycle. Surprises in the risk factors are defined as the difference between the actual value and the predicted value.
Exhibit 1 provides data for the actual and predicted values for the investor sentiment and business cycle risk factors.
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Driver Associates uses a two-factor Arbitrage Pricing Model to develop equilibrium expected returns for individual stocks and portfolios:
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Valry instructs Edson to use the two-factor Arbitrage Pricing Model lo examine Driver Associates

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2019 Updated Exam Questions



Related Posts
well- diversified balanced Portfolio P, which has an Investor Sentiment factor sensitivity equal to 1.25 and a Business Cycle factor sensitivity equal to 1.10. According to Driver Associates's Arbitrage Pricing Model, the expected return for Portfolio P equals:
A. 13.3%.
B. 8.3%.
C. 10.8%.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
According to the Arbitrage Pricing Model, the expected return equals: risk free rate + R + b2RP2 where R is the risk premium for factor i. Portfolio D is designed to have sensitivity equal to one to the investor sentiment risk factor and sensitivity equal to zero to the business cycle risk factor. Similarly, Portfolio E is a portfolio designed to have sensitivity equal to zero to the investor sentiment risk factor and sensitivity equal to one to the business cycle risk factor. Portfolios that have a sensitivity equal to 1.0 to one factor and zero sensitivity to the remaining factors are called "factor portfolios." Therefore, Portfolio D is the investor sentiment factor portfolio and Portfolio E is the business cycle factor portfolio. According to the multifactor equations, the expected return (intercept) for the investor sentiment factor portfolio (D) equals 9% and for the business cycle factor portfolio (E) equals 8%. Risk premiums are defined as the difference between the expected return on the appropriate factor portfolio and the risk-free rate. The risk-free rate is 5% (the long- term government bond yield). Therefore, the investor sentiment risk premium equals 0.09 - 0.05 = 0.04.
Similarly, the business cycle risk premium equals 0.08 - 0.05 = 0.03. Therefore, the expected return for Portfolio P equals 0.05 + 1.25(0.04) + 1.1(0.03) = 13.3%. (Study Session 18, LOS 64.1)

NEW QUESTION: 2
You need to create a training dataset and validation dataset from an existing dataset.
Which module in the Azure Machine Learning designer should you use?
A. Add Rows
B. Join Data
C. Split Data
D. Select Columns in Dataset
Answer: C
Explanation:
A common way of evaluating a model is to divide the data into a training and test set by using Split Data, and then validate the model on the training data.
Use the Split Data module to divide a dataset into two distinct sets. The studio currently supports training/validation data splits Reference:
https://docs.microsoft.com/en-us/azure/machine-learning/how-to-configure-cross-validation-data-splits2

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대량의 현금을 처리하는 은행의 경우 다음 중 어떤 유형의 통제가 가장 효과적입니까?
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B. 형사 통제.
C. 예방 적 통제.
D. 수정 컨트롤.
Answer: C

NEW QUESTION: 4
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A. Option E
B. Option B
C. Option D
D. Option C
E. Option A
Answer: A,D
Explanation:
Reference: https://docs.vmware.com/en/VMware-vSphere/6.5/com.vmware.vsphere.storage.doc/GUID-66215AF3-2D81-4D1F-92D4-B9623FC1CB0E.html

 

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