Which of the Following Is (Are)a Result(s)of the Fama and French

question 38

Multiple Choice

Which of the following is (are) a result(s) of the Fama and French (2002) study of the equity premium puzzle?
I.Average realized returns during 1950-1999 exceeded the internal rate of return (IRR) for corporate investments.
II.The statistical precision of average historical returns is far higher than the precision of estimates from the dividend-discount model (DDM) .
III.The reward-to-variability ratio (Sharpe) ratio derived from the DDM is far more stable than that derived from realized returns.
IV.There is no difference between DDM estimates and actual returns with regard to IRR,statistical precision,or the Sharpe measure.

• A)I, II, and III
• B)I and III
• C)I and II
• D)II and III
• E)IV

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Definitions:

Great Schism

refers to the division within the Christian Church in 1054, leading to the separate development of the Eastern Orthodox and Western Roman Catholic churches.

Northern Renaissance

The cultural and intellectual movement in Europe, particularly in the northern regions, during the 14th to 17th centuries, characterized by a resurgence of interest in classical learning and values.

Italian Renaissance

A period of great cultural change and achievement in Italy that began in the 14th century, characterized by advancements in art, architecture, literature, and science.

Idealism

A philosophical approach asserting that reality, or reality as we can know it, is fundamentally mental, mentally constructed, or otherwise immaterial.