The Fama-French Three Factor Model Predicts the Expected Return on a Portfolio

question 2

Multiple Choice

The Fama-French three factor model predicts the expected return on a portfolio increases:

• A) linearly with its factor loading of the size factor.
• B) linearly with its factor loading of the volume.
• C) exponentially with its factor loading of the size factor.
• D) exponentially with its factor loading of the volume factor.
• E) None of these.

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Definitions:

Parental Strand

The original DNA strand that serves as a template for the synthesis of a new complementary strand during DNA replication.

Newly Synthesized Strand

Refers to a fresh sequence of DNA or RNA that has been created during the process of cell replication or transcription.

Sister Chromatid

One of two identical halves of a duplicated chromosome, joined together at a structure called the centromere before they are separated during cell division.

Chromosomes

Structures within cells that contain DNA and genetic information.