Our goal is to estimate the cost of capital of a small computer firm AST using the CAPM and the Fama-French 3-Factor Model. The risk-free rate is 4% and the excess expected return on the market is 8.6%.

c) Interpret the factor loadings of AST. What does it mean to have bAST,M = 1.58, bAST,SMB =1.19 and bAST,HML =-0.15?