A model in which behavior of asset returns is measured for set of risk factors and market risk is classified as

factorization model
Two factor model
multifactor model
quoted factor model

The correct answer is C. multifactor model.

A multifactor model is a model in which the behavior of asset returns is measured for a set of risk factors. The most common multifactor models are the Fama-French three-factor model and the Carhart four-factor model. These models include market risk, size risk, value risk, and momentum risk, respectively.

A factorization model is a model in which the behavior of asset returns is measured for a set of factors that are not necessarily risk factors. For example, a factorization model might include factors such as industry, country, and liquidity.

A two-factor model is a special case of a multifactor model in which there are only two factors. The most common two-factor model is the CAPM, which includes market risk and beta risk.

A quoted factor model is a model in which the factors are based on observable prices. For example, the Fama-French three-factor model uses the market return, the size premium, and the value premium as factors.

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