Parametric or empirical models rely on:
A)security betas explaining systematic factor relationships.
B)ﬁnding regularities and relations in past market data.
C)there being no true explanations of pricing relationships.
D)always being able to ﬁnd the exception to the rule.
E)None of the above.

Question

Quizplus · Accepted Answer

Parametric and empirical models are based on finding patterns and relationships in past market data. Option A refers specifically to security betas, which is a concept within the broader framework of parametric models. Option C is true in the sense that there is no universally accepted explanation for all pricing relationships in finance, but it is not specific to parametric or empirical models. Option D is not necessarily true and is not specific to parametric or empirical models.

Parametric or Empirical Models Rely On