Which of the Following Is a (Are) Result(s) of the Fama

question 2

Multiple Choice

Which of the following is a (are) result(s) of the Fama and French (2002) study of the equity premium puzzle?I) Average realized returns during 1950-1999 exceeded the internal rate of return (IRR) for corporate investments.II) The statistical precision of average historical returns is far higher than the precision of estimates from the dividend-discount model (DDM) .III) The reward-to-variability ratio (Sharpe) derived from the DDM is far more stable than that derived from realized returns.IV) There is no difference between DDM estimates and actual returns with regard to IRR, statistical precision, or the Sharpe measure.

• A) I, II, and III
• B) I and III
• C) I and II
• D) II and III
• E) IV

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