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Q4 (4 pts) Use the Fama-French 3 Factor Model for the following problem. A firm has MKT= 1.5,SMB=0.25, and HML=1. The SMB risk premium is
Q4 (4 pts) Use the Fama-French 3 Factor Model for the following problem. A firm has MKT= 1.5,SMB=0.25, and HML=1. The SMB risk premium is 5%, the HML risk premium is 3%, and the risk-free rate is 2%. If the firm is indifferent to investing $100 today for an expected payoff of $115 next period, what must be the market risk premium? A. 6% B. 6.5% C. 7.5% D. 8% E. Not enough information to determine Step by Step Solution
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The Value Investor's Handbook
Authors: Andrew P.C.
1st Edition
1098810449, 978-1098810443
