One-Factor models An example Page 295: Figure 11.1 =a+ gDP+e, Where r= the returnon widgetin period t GDP= the predictedrate of returnin gdP in period t e, the unique oe specific return on Widget in period t b= sensitivity of widget to predictedgDP growth a= the zero factor for gdpOne-Factor Models • An example Page 295: Figure 11.1 the zero factor for GDP sensitivity of Widget to predictedGDP growth the unique oe specific returnon Widget in period t the predictedrate of returnin GDP in period t the returnon Widget in period t where: = = = = = = + + a b e GDP r r a bGDP e t t t t t t