Fama-French 3 Factor Model Explained

This is my last video in my series on the CAPM. I am going over the most popular extension, the three factor model from Fama, French (1992). Please comment if you want me to go into more recent work into what models are used to explain returns.

[@dgaunn4114]

Smaller firms return more historically, not less.

[@FinAndEcon]

Yes you are right, thank you

[@vaibz753]

You made a mistake this, when your talking about a secruity its a SML not CML

[@tiagofreitas7659]

Great video! Loved the example-based approach.

[@AceOnBase1]

? Historically smaller firms have higher returns

[@FinAndEcon]

Correct, I did a mistake here

[@adwayjha1549]

great explanation

[@akhilraj8614]

Can you please list some advances on the Farma French model that you were mentioning in the video?

[@FinAndEcon]

1. Obvious is the 5 factor model of Fama-French
2. Using statistical analysis to determine the pricing factors (e.g. www.kentdaniel.net/discuss/2018/kns_daniel.pdf), this can also be done using machine learning models

[@Hassan_MM.]

Please ❤ Do More in all your Playlists

[@Evanrholloway]

This is not accurate.

[@FinAndEcon]

Thank you for your feedback. Which component is inaccurate?