CORGAN INVESTMENTS MOST LIKELY USES THE THREE-FACTOR MODEL FOR PORTFOLIO CONSTRUCTION

25. A is correct. Corgan Investments most likely uses the three-factor model for portfolio

construction. By comparing the expected return of the security with the expected return of its

sector index, a portfolio would be constructed by selecting securities with expected returns

higher than the benchmark. The model is not being used for risk or return attribution of a

portfolio. Section 5.3. LO.f.