Exhibit 3-Fama-French Factor Sensitivities A few days later, Muhammad finishes his analysis and shares it with Blanchet. She notes the conflicting results of the two approaches and asks Muhammad which approach he favors. Muhammad tells Blanchet he favors the Fama-French 3-Factor Model approach for the following reasons: - Reason 1-The Fama-French 3-Factor Model is the best known statistical factor model. - Reason 2-Evidence shows the Fama-French 3-Factor Model is a better predictor of expected return than the CAPM. - Reason 3-The inclusion of the size factor and the value factor into the FamaFrench 3-Factor Model is based on both being well-known market anomalies. All the reasons Muhammad provides Blanchet regarding the value of the FamaFrench 3-Factor Model approach are valid except Reason 1 Reason 2 Reason 3