Question

4. What theories/models may justify that small and value stocks are fairly priced? (choose the best answer)

A. CAPM

B. APT

C. Fama French 3 factor

D. APT or Fama French 3 factor

E. No theories can justify this

Answer #1

**Answer C. Fama
French 3 factor**

The Fama and French Three Factor Model is an asset pricing model that expands on the capital asset pricing model (CAPM) by adding size and value factors to the market risk factor in CAPM. This model considers the fact that value and small-cap stocks outperform markets on a regular basis. By including these two additional factors, the model adjusts for the outperformance tendency, which is thought to make it a better tool for evaluating manager performance.

The 3 distinct risk factors are,

- Beta
- Size
- Value

Small or value stocks appear underpriced in which
models?
A.
No model suggests that small or value stocks are
undervalued.
B.
the Fama-French 3-factor model.
C.
the CAPM model.
Please explain

The Jensen's alpha of a portfolio is equal to zero. Choose the
following option which provides the correct interpretation for this
result.
Select one:
a. The return of the portfolio is equal to the portfolio return
implied by the CAPM given the exposure of the portfolio to the
market portfolio.
b. The portfolio has out-performed the portfolio return implied by
the CAPM given the exposure of the portfolio to the market
portfolio.
c. The return of the portfolio is equal...

7. What are the products below that makes the most
sense for real believers of market efficiency to offer to
their clients in a Fama-French three-factor model world?
A. Only S&P 500
B. Only small stock portfolio
C. Only large stock portfolio
D. Only small or value portfolios
E. Only large or growth portfolio
F. Only risk-free assets
G. Any random portfolio of stocks

We know that two stocks A and B are correctly priced by the CAPM
model. For A, the expected return is 12%, and the beta is 1.5; for
B, the expected return is 6%, and the beta is 0.5. Based on this
information, what is the risk free rate and equity risk
premium?
Select one: A. 3%; 9%
B. 3%; 6%
C. 2%; 8%
D. 4%; 10%

"Risk' can be best defined as on the of the
followings:
a. Variability of returns and probability of financial loss
b. Chance of financial loss
c. Variability of returns
d. Correlation of relationship among two variables
Which of the following statement is NOT TRUE when we argue that
the idea of riskless arbitrage is to accumulate the portfolio with
following conditions :
a. Requires no net wealth invested initially
b. Invest in the long-term securities only where risk will be...

Suppose stocks offer an expected rate of returns of 10% with a
standard deviation of 20%, and gold offers an expected return of 5%
with a standard deviation of 25%. (i) If the correlation between
gold and stocks is sufficiently low, gold ______ be held as a
component in the optimal portfolio. (ii) If the correlation
coefficient between gold and stocks is 1.0, then gold ______ be
held as a component in the optimal
portfolio.
Question 1 options:
A)
(i)...

Identify the proper hormonal release-response from the list
below:(Choose the best answer)
A. FSH release- stimulates oogenesis and estrogen release
B. Inhibin- directly controls progesterone secretion
C. Relaxin- inhibits oxytocin secretion
D. FSH- directs formation of corpus luteum
E. Progesterone- stimulates ovulation
F. Both A and C
G.Both D and E
2. All are true of the myometrium:(Choose the best answer)
A. It is composed of smooth muscle in three layers
B. It is the site of implantation of the...

1.
Choose the best
specific
example for the sequence:
1)
RH + light + Br2 ---> 2) + KOH
--->?
?a. 1-butene from
butane??????
?b. 2-methyl-2-proponal
from 2-methylpropane
?c. benzaldehyde
alcohol
from toluene
?d. styrene
from ethylbenzene
2.
Select the reactions that can be employed to make
2-butanol.
?1. propanal
+
methylmagnesuimbromide 2. 1-butene
+ H3O+
?3. CH3CH2CH2MgBr +
CH2=O 4. ethyllithium
+
oxirane
?5. acetone
+
CH3MgBr
?a. 1,2
?
?b. 2,3?
?c. 3,4?
?d. 4,5
3. What
are...

What distribution best models each situation? (No actual work,
just which distribution best models the problem)
A. According to the Daily Racing Form, the probability is about
0.67 that the favorite in a horse race will finish in the money
(first, second or third place). Suppose that you always bet the
favorite “across the board”, which means that you win something if
the favorite finishes in the money. What probability distribution
describes the number of races that you bet until...

what would be the best buffering agent to choose if you want to
buffer an enzyme reaction or tissue culture at
7.2 a. hepes
(4-(2-hydroxyethyl)-1piperazineethanesulfonic acid) pk =7.5 b.
histidine pk 1=1.78; pk2=5.97; pk3=8.97 c. bicarbonate; pk=6.1 d.
phosphate; pk1=2.0, pk2=6.8; pk3=12.5 e. tris or
tris(hydroxymethyl)aminomethane; pk=8.07

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