The Fama-French Three Factor Model Predicts the Expected Return on a Portfolio

question 33

Multiple Choice

The Fama-French three factor model predicts the expected return on a portfolio increases:

• A)linearly with its factor loading of the size factor.
• B)linearly with its factor loading of the volume.
• C)exponentially with its factor loading of the size factor.
• D)exponentially with its factor loading of the volume factor.
• E)None of the above.

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Definitions:

Reinforcements

In behavioral psychology, stimuli which, when presented after a behavior, increase the likelihood of that behavior being repeated.

Deficiencies

The absence or lack of necessary qualities, skills, or resources.

Positive Consequence

A beneficial result or effect of an action or decision, often used to encourage desirable behaviors.

Promotion

The act of raising someone to a higher position or rank or the increasing of something's importance or value.