5.2 Discuss the Fama-French three factor model and its practical significance. ( 5 marks) 5.3 Suppose the returns on all well-diversified portfolios are determined by the following two factor model rw=E(rw)+w1(F1E(F1))+w2(F2E(F2)) Consider the following statement: if any two well-diversified portfolios, A and B, have the same betas on each factor, they must have the same expected returns. Use an absence of arbitrage argument to prove this statement. (10 marks)