Q$2($market factor$)$: What is beta? Would an investor find a high beta firm attractive? Give reasons. Other things being equal, would you expect the price of high beta firms to be higher or lower? Would you expect the future return of high beta firms to be higher or lower? Q$2($Value factor$)$: Why do you think some firms have a high book$-$to$-$market ratio. $($i$.$e$.,$ a high ratio of book$-$value per share over price per share$)?$ Why would firms with a high book to market ratio be associated with a higher future return $($on average$)?$ Q$2($Size factor$)$: What are some reasons small firms are more likely to have higher future returns on average?