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Short Answer. Suppose We have a measure of idiosyncractic volatility (IVOL) for each stock each month. a) Design a test of the IVOL premium using

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Short Answer. Suppose We have a measure of idiosyncractic volatility (IVOL) for each stock each month. a) Design a test of the IVOL premium using the Fama-Macbeth approach. b) What is the theoretical prediction and the empirical finding of IVOL premium? Can you provide an explanation for the difference in the two

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