Which of the Following Factors Were Used by Fama and French

question 34

Multiple Choice

Which of the following factors were used by Fama and French in their multifactor model?

• A) Return on the market index
• B) Excess return of small stocks over large stocks
• C) Excess return of high book-to-market stocks over low book-to-market stocks
• D) All of the factors were included in their model.
• E) None of the factors were included in their model.

Understand the properties and assumptions underlying the random error term in regression models.

Distinguish between different types of relationships indicated by correlation coefficients.

Understand the role of residuals in validating regression models.

Analyze and interpret scatterplots and correlation in the context of linear relationships.

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Definitions:

Kemp-Roth Tax Cut

A significant federal tax cut in the United States passed in 1981, aiming to stimulate economic growth through reduced individual income tax rates.

Social Security Taxes

Taxes collected to fund the Social Security program, which provides retirement, disability, and survivorship benefits to qualifying individuals.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of good, or transaction being taxed.

Marginal Tax Rate

The rate of tax applied to the last dollar of income, reflecting the tax bracket into which the incremental income falls.