Assessment explanationThe value premium, also known as the value factor or book$-$to$-$market $($B$/$M$)$ ratio effect, in stock returns is the phenomenon that value stocks $($stocks with B$/$M$)$ on average outperform growth stocks $($stocks with low B$/$M$)$ stocks over time. Therefore, the value premium can be inferred by the portfolio return difference between a high B$/$M and a low B$/$M portfolio $($i$.$e$.,$ value minus growth$).$ In this assignment, you will evaluate the performance of the value premium across the globe. Professor Kenneth French is one of the authors of Fama and French's $(1993)$ three$-$factor model that incorporates a value premium. In his data library, he has shared historical returns for various asset classes and portfolios, including the value premiums.In the Excel file titled Global Market Risk Premium and Value Premiums across Regions, you are given the monthly value premiums across six regions$/$countries as of the past $30$ years $($January $1993$ December $2023)$:$1)$ Developed$2)$ Emerging$3)$ Europe$4)$ Japan$5)$ Asia$-$Pacific Excluding Japan$6)$ North AmericaThat is$,$ the number in each cell indicates the monthly value premium for that particular country$/$region$.$ You are also given the monthly market risk premium of the global market, named Global Market.Global Market Risk Premium and Value Premiums across Regions Dec$23.$xlsxTask$1)$ Calculate the time$-$series average returns and standard deviations to the value premiums across the six regions$/$countries$.$ You should also consider the reward$-$to$-$risk ratios calculated as premiums divided by standard deviation. Over the sample period and regions$/$countries considered, do you think that B$/$M matters in investment strategy? $(20$ marks$)2)$ Calculate the time$-$series average returns and standard deviations to the global market risk premiums. Compare the performance of those value premiums in part $(1)$ with the global market risk premium over the same period. Do they outperform or underperform the market? $(5$ marks$)3)$ Examine the time$-$series return pattern of these value premiums. Are there any specific periods in which the value premiums outperform or underperform? Based on the time$-$series return pattern, do you think market condition $($e$.$g$.,$ boom or recession$)$ plays a role in explaining the return variation for the value premiums? $(20$ marks$)4)$ Conduct some literature review on academic articles on the value premiums. Based on your review, identify two potential theories$/$reasons why firms with high B$/$M ratio outperform ones with low B$/$M ratios. Also, review the findings on past literature conducted on value premiums in the regions$/$countries above. Is your finding consistent with the extant literature? $(35$ marks$)$