The three factors in the Three-Factor Model are:
I. Market factor
II. Size factor
III. Book-to-market factor
A) I only
B) I and II only
C) I,II, and III
D) III only

Question

Quizplus · Accepted Answer

The Three-Factor Model includes all three factors: the market factor, size factor, and book-to-market factor. These factors are used to explain the returns of a diversified portfolio. Therefore, option C is the correct answer.

The Three Factors in the Three-Factor Model Are