A measure which is not included in Fama French Three-Factor model is

A realized risk free rate
B rate of return on market
C random error
D risk premium

Correct Answer: risk premium

A measure which is not included in Fama French Three-Factor model is risk premium. The Fama-French three-factor model is an expansion of the capital asset pricing model (CAPM) CAPM formula shows the return of a security is equal to the risk-free return plus a risk premium, based on the beta of that security. The model is adjusted for outperformance tendencies.
Bissoy MCQ
#Commerce #Financial Management

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