A less restrictive form of the Single Index Model is the:
A)Risk-free Model.
B)CAPM.
C)CML.
D)Market Model.

Question

Quizplus · Accepted Answer

The Market Model is a less restrictive form of the Single Index Model as it allows multiple factors to influence the returns of an asset, rather than just a single market index. This model is based on the assumption that an asset's returns are determined by the returns of the overall market and any unique factors that affect the asset. This model can be used to estimate an asset's beta, which can then be used in the CAPM to calculate an expected return.

A Less Restrictive Form of the Single Index Model Is