Question: Answer the questions using the relevant information, examples, corporate theories and empirical studies. Question Although Fama-French-Carhart (FFC) factor specification is widely used in academic literature

Answer the questions using the relevant information, examples, corporate theories and empirical studies.

Question

Although Fama-French-Carhart (FFC) factor specification is widely used in academic literature to measure risk, much debate still persist on whether it really is a significant improvement over CAPM. Evaluate the strengths and weaknesses of these two models when used in estimating the cost of capital. In addition, describe what other techniques are used by corporations to calculate the cost of capital by referring to some of the past empirical studies.

Assignment Format a. Provide references using the American Psychological Association (APA) format. b. References should be as current as possible (year 2010 onwards).

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