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The Market Return Is 12% and the Risk Free Rate

Question 38

Multiple Choice

The market return is 12% and the risk free rate is 4%. Smallish Inc. has a market beta of 0.9, a SMB beta of 0.65, and a HML beta of .52. If the risk premium on HML and SMB are both 2%, using the Fama-French Three Factor Model, what is the expected Return on Smallish Inc. stock?


A) 4.86%
B) 7.46%
C) 12.3%
D) 13.54%

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