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:

Influence

The capacity to have an effect on the character, development, or behavior of someone or something, or the effect itself.

Sigmund Freud

An Austrian neurologist who is the founding father of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Unconscious

A part of the mind that houses thoughts, memories, and desires not within conscious awareness, a concept central to psychoanalytic theories.

Neurotic

Refers to an individual experiencing emotional distress but not losing touch with reality, often resulting from underlying stress or anxiety.