Asked by
Krystal Monica
on Oct 20, 2024
Verified
The Fama and French evidence that high book-to-market firms outperform low book-to-market firms even after adjusting for beta means that ________.
A) high book-to-market firms are underpriced or the book-to-market ratio is a proxy for a unique risk factor
B) low book-to-market firms are underpriced or the book-to-market ratio is a proxy for a systematic risk factor
C) either high book-to-market firms are underpriced or the book-to-market ratio is a proxy for a systematic risk factor
D) high book-to-market firms have more post-earnings drift
Book-To-Market Firms
Firms characterized by their high book value relative to market value, often used as an investment metric.
Adjusting for Beta
The process of modifying an investment or portfolio's risk profile to align with a desired level of market volatility or beta.
Underpriced
A term used when a security is selling for a price less than its intrinsic or fair value.
- Apprehend the construct of market efficiency across multiple variants and its consequence for planning investment strategies.
Verified Answer
CS
Learning Objectives
- Apprehend the construct of market efficiency across multiple variants and its consequence for planning investment strategies.
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