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FIN 470A/560A
Research Methods in Finance
R Group Assignment 3
Due September 30, 2019
[This Version: 09-22-2019]
1. Download monthly return data for decile portfolios formed from a characteristic from
Ken French’s Data Library. Also download monthly data for the three Fama-French
factors (market, size, value) and risk-free return.
2. Compute the monthly excess return for each decile portfolio.
3. Estimate a Fama-French three-factor regression for each decile portfolio excess return.
Report the results (coefficient estimates, standard errors, t-statistics, R2
statistics) in
a table. Discuss the results.
4. Do the results indicate that the Fama-French three-factor model adequately captures
systematic risk?
5. Provide the R code in an appendix.

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