3) The table below reports the estimated coefficients of the following cross-sectional (Fama and MacBeth) regression: n RETi = b, CONTROLS-1 +eit j=1 where RET it is firm i's return for month t and CONTROLS it-1 are the n control variables for firm i observed at month t-1. The control variables include the stock market beta (BETA), the firm's, market value (SIZE), the book value of equity to market value of equity (BM), and the sales to price ratio (SP). The regression is estimated with constituents of the S&P 500. t-statistics are reported in [brackets]. Constant Regression coefficient 0.0069 BETA 0.0005 T-statistic [0.58] [0.18] SIZE -0.0027 [-2.18] BM 0.0060 [2.44] SP 0.0013 Adj R 0.0582 [3.01] a) Out of the stock characteristics that are considered in the estimation of this regression which ones are predictive of the firm's future returns in this sample? (6 marks) b) Is the documented predictability consistent with our priors? Provide a short discussion of the intuition of the predictive factors. (6 marks) c) What investment strategies would you consider implementing on the basis of these results? (8 marks)