Briefly Discuss How You Would Use Fama-French Three-Factor Model to Estimate

question 48

Essay

Briefly discuss how you would use Fama-French three-factor model to estimate the cost of equity for a firm.

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Definitions:

Normal Model

A statistical distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence.

Probability

The measure of the likelihood that a given event will occur, often expressed as a number between 0 and 1.

Uniform Density

Describes a distribution where all outcomes are equally likely, or objects are evenly distributed across a specific area or volume.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.