Final Concepts Flashcards
1
Q
What was the motivation behind Single Factor Mode;
A
CAPM or Markowitz model was too costly to estimate as number of securitities increased. Inconsistency in sample correlation
2
Q
Motivation behind Multifactor models
A
Higher explanatory power
3
Q
what is the condition that must be present for fama-french to be able to estimate returns
A
trabable factor portifolios
4
Q
SMB means in famma french. What was the rational.
A
Small Minus Big
smaller sized firms have higher risk
5
Q
HML means in famma
A
High minus low. Hig book to valye firms have more risk
