Bond rating agencies (e.g. Moody's or Standard & Poor's) make a living out of appraising the prospects for bonds' default. Note that the efficient set is a straight line only if the investor can borrow and lend at the same risk-free rate, r0. Gucci Jackie Black. on or within FF) with an expected return equal to w (i.e. along the horizontal line starting at W) have rates of return that are uncorrelated with the return to portfolio P. Gucci Jackie O Silver. It is even possible to dispense entirely with the selection of variables to represent the factors; the factors can be allowed to remain implicit in the data on assets' rates of return. Gucci Jackie Black. Another approach is to view the theory as providing a method of valuing bonds that may or may not be traded in open markets. Gucci Zebra Shoes. While almost any outcome could be obtained by manipulating the rule for estimating p*, alternatives constructed in the spirit of equation (10.11) tend to contradict the prediction. Gucci Jackie Black. Preferences are not observed, and, hence, a crucial element of the evidence is necessarily circumstantial.