Muhammad agrees to use Blanchet's data. He then uses multiple regression analysis to estimate the Fama-French 3-Factor Model factor sensitivities which appear in Exhibit 3. Exhibit 3-Fama-French Factor Sensitivities A few days later, Muhammad finishes his analysis and shares it with Blanchet. She notes the conflicting results of the two approaches and asks Muhammad which approach he favors. Muhammad tells Blanchet he favors the Fama-French 3-Factor Model approach for the following reasons: - Reason 1-The Fama-French 3 Factor Model is the best known statistical factor model. - Reason 2-Evidence shows the Fama-French 3-Factor Model is a better predictor of expected return than the CAPM. - Reason 3-The inclusion of the size factor and the value factor into the FamaFrench 3-Factor Model is based on both being well-known market anomalies. Blanchet agrees with Muhammad and a few days later his favored stock is added to the Based on the factor sensitivities in Exhibit 3, which of the three stocks is most likely to be considered inappropriate for a growth portfolio? Clearcut Technology Bearcat Semiconductor Slovenia Microdevices Question 7 (1 point) Based on the factor sensitivities in Exhibit 3, which of the three stocks would benefit the most if small-cap stocks outperform large-cap stocks? Clearcut Technology Bearcat Semiconductor Slovenia Microdvices Muhammad agrees to use Blanchet's data. He then uses multiple regression analysis to estimate the Fama-French 3-Factor Model factor sensitivities which appear in Exhibit 3. Exhibit 3-Fama-French Factor Sensitivities A few days later, Muhammad finishes his analysis and shares it with Blanchet. She notes the conflicting results of the two approaches and asks Muhammad which approach he favors. Muhammad tells Blanchet he favors the Fama-French 3-Factor Model approach for the following reasons: - Reason 1-The Fama-French 3 Factor Model is the best known statistical factor model. - Reason 2-Evidence shows the Fama-French 3-Factor Model is a better predictor of expected return than the CAPM. - Reason 3-The inclusion of the size factor and the value factor into the FamaFrench 3-Factor Model is based on both being well-known market anomalies. Blanchet agrees with Muhammad and a few days later his favored stock is added to the Based on the factor sensitivities in Exhibit 3, which of the three stocks is most likely to be considered inappropriate for a growth portfolio? Clearcut Technology Bearcat Semiconductor Slovenia Microdevices Question 7 (1 point) Based on the factor sensitivities in Exhibit 3, which of the three stocks would benefit the most if small-cap stocks outperform large-cap stocks? Clearcut Technology Bearcat Semiconductor Slovenia Microdvices