'ou may find it useful to use a computer spreadsheet program such as Microsoft Excel to calculate your answers.) statistics to two decimal places. b. How well does the factor model explain the variation in portfolio returns? On what basis can you make an evaluation of this nature? The factor models explain regression results, which one of these factors is the most likely to be the market factor? Explain why. d. Suppose it is further revealed that Factor 3 is the HML factor. Which of the two portfolios is most likely to be a growth-oriented fund and which is a value-oriented fund? Explain why. is the more likely candidate for the value-oriented portfolio as it has a loading on this factor. 5 the more likely candidate for the growth-oriented portfolio as it has a positive negative