16. The Fama-French three-factor model Aa Aa Consider the following two statements and identify which model each describes: This model argues that the realized return on any stock is the sum of the market's risk-free rate and the market premium multiplied by the sensitivity of the stock to this market return This model uses market risk, the company's size, and the company's book-to-market value to estimate the required return on a security. O Capital Asset Pricing Model O Fama-French three-factor model O Capital Asset Pricing Model Fama-French three-factor model Warren, an analyst at Fantasy Analytics (FA), models the stock of the company. Suppose that the risk-free rate RF = 5%, the required market return r,-11%, the risk premium for small stocks rsMB-3.2%, and the risk premium for value stocks rHML = 4.8%. Suppose also that warren ran the regression for Fantasy Analytics's stock and estimated the following regression coefficients : aFA = 0.00, bFA-0.7, CFA = 1.2, and dFA = 0.7. If warren uses a Fama-French three-factor model, then which of the following values correctly reflects the stock's required return? 19.64% 11.40% 16.40% O O 8.00%