Multiple Choice
The market return is 10% and the risk free rate is 3%. Rascals Inc. has a market beta of 1.0, a SMB beta of −.60, and a HML beta of −0.85. If the risk premium on HML and SMB are both 2%, using the Fama-French Three Factor Model, what is the expected Return on Rascal Inc. stock?
A) 5.85%
B) 7.10%
C) 13.2%
D) 15.3%
Correct Answer:
Verified
Correct Answer:
Verified
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