1. Read the article below and then answer the questions that follow it. Lily Fang and Joel Peress, in a study titled "Media Coverage and the Cross-Section of Stock Returns" found that a portfolio of stocks with no media coverage outperforms a portfolio of stocks with high media coverage by 3% annually (after adjusting for market, size, book-to- market, momentum, and liquidity)." Their sample consisted of all companies listed on the NYSE and 500 randomly selected companies listed on the NASDAQ between January 1, 1993 and December 31, 2002. Media coverage was measured by the number of times each firm was mentioned in four influential daily newspapers with nationwide circulation: New York Times (NYT), USA Today (USAT), Wall Street Journal (WSJ), and Washington Post (WP) during the time period mentioned above. The authors note that the outperformance of stocks not covered by the media is particularly large among i) small caps, ii) stocks with low analyst coverage, iii) stocks primarily owned by individuals, and iv) stocks with high volatility relative to the market. For some of these subclasses, the annual premium (relative to stocks covered heavily by the media) ranges from 8% to 12% after adjusting for risk. (That is, heavily covered companies returned 8% to 12% less annually than lightly covered companies after risk was accounted for.) These figures are not only statistically significant, but also economically large. a) In the study described above, 1 what research question is being tested? (2 points) b) Who are the decision makers who are being studied? (1 point) c) List the three criteria that we use to classify studies. Then assess this study using each one of the three criteria. Place an X on the behavioralist vs. rationalist paradigm continuum below to signify the type of study it is. (7 points) Behavioralist Paradigm Rationalist Paradigm