ack to Assignment Average: 3 Attempts: Aa Al 16. The Fama-French three-factor model Consider the following two statements and identify which model each describes This model is incorrect because the size effect This model uses a single risk factor, the it uses does not influence stock rns and the variability of the stock with respect to the book-to-market value effect either is market portfolio, to explain the required return tion of risk insignificant or is not a on a security or portfolio O Capital Asset Pricing Model O Fama-French three-factor model Fama-French three-factor model O Capital Asset Pricing Model Michael, an analyst at Grotesque Computers models the stock of the company. Suppose that the risk-free rate TRF 6,5%, the required market return 12.5%, the risk premium for small stocks rsMe 3.2% and premium for valu stocks rHMLE 4.8%. Suppose also that Michael ran the regression for Grotesque Co s stock and estimated the following regression coefficients: aGa 0.00, GC 0.2, and dao b Michael uses a Fama three-factor model, hen which of the fol values oorrectly reflects the stocks required return? 13.98 o 3.18% Grade Now Save & Continue