Fama and French Examined the Relationship Between the Book Value

question 20

Multiple Choice

Fama and French examined the relationship between the Book Value to Market Value ratio and average stock returns and found

• A) No evidence of a relationship for Canadian stocks.
• B) Evidence of a negative relationship in Canadian stocks only.
• C) Evidence of a positive relationship for Japanese stocks only.
• D) Evidence of a negative relationship for Canadian and Japanese stocks.
• E) Evidence of a positive relationship for U.S. and Japanese stocks.

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Definitions:

Movement

An act of changing physical location or position or of having this changed.

Cotton Gin

A machine invented by Eli Whitney in 1793 that quickly and efficiently removed seeds from cotton fibers, revolutionizing the cotton industry and significantly impacting the institution of slavery in the United States.

Slave Labor

Work done under force without proper remuneration, often under extremely harsh conditions, primarily referred to in the context of African slaves in the Americas during the colonial and antebellum periods.

Eli Whitney

Known for inventing the cotton gin, a pivotal invention in the history of agriculture and the economy of the United States.