You Have a 3 Factor Model to Explain Returns $\beta$ What Do These Represent and How Do They Relate to What

question 5

Essay

You have a 3 factor model to explain returns. Explain what a factor represents in the context of the APT? Each factor is multiplied by a $\beta$ what do these represent and how do they relate to the actual return?

---

Definitions:

Alcohol

A chemical substance found in drinks like beer, wine, and spirits, which can alter consciousness and often has intoxicating effects.

Venipuncture

The puncture of a vein with a needle, typically for the purpose of drawing blood or administering intravenous therapy.

Hydrogen peroxide

A chemical compound (H2O2) used as an oxidizer, bleaching agent, and antiseptic.

Sodium chloride

A chemical compound known as table salt, commonly used in food seasoning and preservation.