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Two-Factor Model

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Two-factor model
Usually, Fischer Black's zero-beta version of the capital asset pricing model. It may also refer to another type of model whereby expected returns are generated by any two factors.

Two-Factor Model
1. An economic model that states that production is derived from two factors. These factors are the availability of cost of labor and the availability and cost of capital.

2. A form of the capital asset pricing model that does not account for beta. This form of the CAPM was developed by Fischer Black.

3. Any economic model that discusses two factors as predominate or exclusive causes of some event.


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001), which indicates that the two-factor model fitted to the data significantly better than the one-factor model.
The two-factor model can largely be divided into "coldness" (including both the care and the abuse factors from the original study) and "over-control.
Tests of Integration and Contagion at Sector Level In examination of the two-factor model of Models (1)-(3), we assume first that the conditional betas are time invariant to obtain a benchmark case, and then relax this assumption and allow the betas to change over time.
 
 
 
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