Question 9

The size effect suggests

		Fama-French 3 factor model is a wrong model
		Either market is likely inefficient or the CAPM model is not right
		Every small stock should outperform large stock in the long term
		A portfolio of small stock should outperform a portfolio of large stock next year

According to the capital asset pricing model, a security with a _________.

		zero alpha is a good buy
		positive alpha is considered underpriced
		positive alpha is considered overpriced
		negative alpha is considered a good buy