The four-factor model used to construct performance benchmarks for mutual funds uses the three Fama and French factors and one additional factor related to ________.
A) the tenure of the fund manager
B) momentum
C) fees
D) the age of the fund manager

Question

Quizplus · Accepted Answer

The four-factor model used to construct performance benchmarks for mutual funds uses the three Fama and French factors (market risk, size, and value) and one additional factor related to momentum. This momentum factor measures the tendency of stocks that have performed well or poorly in the past to continue to do so in the future. Factors related to the tenure or age of the fund manager or fees are not included in the four-factor model.

The Four-Factor Model Used to Construct Performance Benchmarks for Mutual