In a micro-economic (or characteristic)based risk factor model the following factor would be one of many appropriate factors:
A) Confidence risk.
B) Maturity risk.
C) Expected inflation risk.
D) Call risk.
E) Return difference between small capitalization and large capitalization stocks.

Question

Quizplus · Accepted Answer

The return difference between small capitalization and large capitalization stocks is a relevant factor in a micro-economic risk model as it reflects differences in the characteristics of the underlying companies, such as their size, growth prospects, and market exposure. Factors such as confidence risk, maturity risk, expected inflation risk, and call risk are more relevant to macroeconomic risk models.

In a Micro-Economic (Or Characteristic)based Risk Factor Model the Following