Assume the Following Data for a Stock: Risk-Free Rate =

question 16

Multiple Choice

Assume the following data for a stock: Risk-free rate = 5%; Beta (market) = 1.5; Beta (size) = 0.3; Beta (book-to-market) = 1.1; Market risk premium = 7%; Size risk premium = 3.7%; and Book-to-market risk premium = 5.2%.Calculate the expected return on the stock using the Fama-French three-factor model.

• A)22.3%
• B)7.8%
• C)11.5%
• D)20.9%

Know how to handle and interpret different sample sizes in statistical analysis.

Interpret the meaning of specific symbols and notations in the context of statistical tests (e.g., t, p).

Understand the relevance of assumptions underlying various statistical tests.

Understand and apply the concept of null hypothesis and significance levels in hypothesis testing.

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