The Fama and French Three Factor Model Uses ___,___,And ___

question 14

Multiple Choice

The Fama and French three factor model uses ___,___,and ___ as factors.

• A)industrial production, term spread, default spread
• B)industrial production, inflation, default spread
• C)firm size, book-to-market ratio, market index
• D)firm size, book-to-market ratio, default spread
• E)none of the above

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Definitions:

Depreciable Cost

The total cost of an asset that is subject to depreciation, which includes the purchase price minus any salvage value.

Useful Life

The estimated period of time over which a fixed asset is expected to be usable by the business, influencing depreciation calculations.

Depreciation Expense

The allocated cost of using a fixed asset over its useful life, reflecting its decrease in value over time.

Straight-line Method

A method for calculating depreciation of an asset, which assumes the asset will lose an equal amount of value each year over its useful life.