15. The Fama-French three-factor model Consider the following two statements and identify which model each describes: This model relies on only one explanatory factor for a security's (or portfolio's) required return and imposes a large number of restrictive and unrealistic assumptions. Fama-French three-factor model Capital Asset Pricing Model This model argues that a security's required return is a function of the market risk premium, the company's size, and the company's book-to-market value ratio. Fama-French three-factor model Capital Asset Pricing Model