Which One of the Following Combinations Will Tend to Produce

question 87

Multiple Choice

Which one of the following combinations will tend to produce the highest rate of return according to the Fama-French three-factor model? Assume beta is constant in all cases.

• A)large market capitalization and high book-to-market ratio
• B)large market capitalization and low book-to-market ratio
• C)small market capitalization and high book-to-market ratio
• D)small market capitalization and a book-to-market ratio of 1.0
• E)small market capitalization and a low book-to-market ratio

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Definitions:

Integers

Whole numbers that can be positive, negative, or zero, but not fractions or decimals.

Decimal Numbers

Numbers expressed in the base-10 numeral system, including integers, fractions, and real numbers notated with a decimal point.

New Operator

In many programming languages, this operator is used to create new instances of objects by allocating memory for them.

Int Variable

A variable in programming that stores an integer, which is a number without a fractional component, used for counting or indexing.