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Which of the Following Must Be Done to Test the Multifactor

Question 16

Multiple Choice

Which of the following must be done to test the multifactor CAPM or the APT?I) Specify the risk factorsII) Identify portfolios that hedge the risk factorsIII) Test the explanatory power of hedge portfoliosIV) 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

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