Which of the Following Correctly Identifies the Factors Included in the Fama-French

question 41

Multiple Choice

Which of the following correctly identifies the factors included in the Fama-French three-factor model?

• A)standard deviation, beta, and company size
• B)the risk-free rate, beta, and the market risk premium
• C)company size, company industry, and beta
• D)price-earnings ratios, beta, and book-to-market ratios
• E)beta, company size, and book-to-market ratios

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Definitions:

Normal Distribution

A bell-shaped frequency distribution curve where most occurrences take place in the middle of the range and the probabilities of values farther away from the mean taper off equally in both directions.

Predictive Validity

How well a score from a test or scale indicates anticipated performance in tasks or outcomes that are related.

IQ Test

A standardized assessment used to measure human intelligence and cognitive abilities in relation to an age-group norm.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together, showing the strength and direction of a relationship.