Question

6. Multifactor asset pricing model that can be used to estimate the ........ rate for the valuation of
financial asset.
(A) discount
(B) interest
(C) expense
(D) risk​

Answer 1

Answer:

A is correct answer

discount rate for valution of financial assets

Answer 2

Multifactor asset pricing model that can be used to estimate the discount rate for the valuation of a financial asset.

• A multi-factor model is a financial modelling technique that examines and explains asset values using a number of different variables.
• The Capital Asset Pricing Model (CAPM), which represents a multifactor asset pricing model, is generally employed to determine the discount rate for the worth of a financial instrument.
• The suitable discount rate for use when valuing a financial commodity can be estimated here by investors and financial experts.
• The model states that the risk-free rate, the expected return on the market, and the asset's vulnerability to market risk all influence the expected return on an asset.
• The model makes the assumption that buyers require a higher expected yield for taking on greater levels of risk and are logical and risk-averse.

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