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2. Portfolio sorting is one of the most popular way to identify predictability in the cross section of stock returns. a). Briefly discuss the difference

2. Portfolio sorting is one of the most popular way to identify predictability in the cross section of stock returns.

a). Briefly discuss the difference between sequential and independent double (Bi-variate) sorting. What would happen if the two sorting variables are independent with each other?

b). Comparing with the portfolio sorting approach, what are the advantages and disadvantages of the Fama-Macbeth regression approach

Ref: http://www.business.unr.edu/faculty/liuc/files/BADM742/Fama_MacBeth_1973_1.pdf

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