In a multifactor model,time horizon risk represents
A) Unanticipated changes in the level of overall business activity.
B) Unanticipated changes in investors' desired time to receive payouts.
C) Unanticipated changes in short term and long term inflation rates.
D) Unanticipated changes in the willingness of investors to take on investment risk.
E) None of the above.

Question

Quizplus · Accepted Answer

Time horizon risk in a multifactor model represents unanticipated changes in investors' desired time to receive payouts. This can impact an investor's willingness and ability to hold an asset over a certain period, which can affect the overall risk of the investment. Time horizon risk is not related to changes in business activity or inflation rates, nor is it directly related to investors' willingness to take on risk.

In a Multifactor Model,time Horizon Risk Represents