MULTIFACTOR MODELS CAN BE USED TO REPLICATE RISK EXPOSURES OF A BENCHMARK FOR A PASSIVELY MANAGED PORTFOLIO WHEN NUMBER OF STOCKS IN A BENCHMARK MAY BE TOO HIGH OR INVESTING IN ALL STOCKS IS NOT POSSIBLE

11. - CFA 2018 LEVEL 2 PORTFORLIO QUESTION BANK R48 INTRODUCTION TO MULTIFACTOR MODELS Q BANK
CFA 2018 LEVEL 2 PORTFORLIO QUESTION BANK R48 INTRODUCTION TO MULTIFACTOR MODELS Q BANK

11. C is correct. Multifactor models can be used to replicate risk exposures of a benchmark for a

passively managed portfolio when number of stocks in a benchmark may be too high or

investing in all stocks is not possible. Section 5.3. LO.f.