Fama and MacBeth (1973) [Risk, Return, and Equilibrium: Empirical Tests, Journal of Political Economy 91, 607-636] is one of the “standard” references on testing the CAPM.   Using first- and second-pass equations with clearly defined terms, describe the cross-sectional testing procedure employed by Fama and MacBeth. [8] What are four hypotheses and implications of the second-pass model of Fama and MacBeth? [6] What are the methodological issues faced by Fama and MacBeth and how do they address them? [8] The significance of their estimates was determined using an approach that is now called the “Fama-MacBeth t-statistics” and is commonly used in Corporate Finance. How is this computed? [3]

Fama and French (1993) [Common Risk Factors in the Returns on Stocks and Bonds, Journal of Financial Economics 33, 3-56] use a time-series approach to asset pricing to demonstrate that (1) three stock market risk factors and two bond market risk factors are “priced” in stock and bond returns and (2) that the cross-section of average stock and bond returns are explained by these risk factors.   Using an appropriately described equation, discuss the time-series approach to asset pricing used by Fama and French to achieve the above objectives. That is, list/discuss the measures or tests that Fama and French consider to determine if a given time series test has done a good job to price the returns on test assets. [20] Discuss diagnostic tests and the rationale for each test carried out by Fama and French (1993) to ensure the validity of their inferences. [5]  

Sierra is talking to their employee who is about to leave for a short term international assignment in Iceland. She is trying to counsel her apprehensive employees on the common risks they may face. What are some of the most common challenges individuals may face?

 Which company is using the “Delay” tactic to manage an environmental/health issue?  A)  Axis blames one of their suppliers for the harmful substance B)  Betadyne calls for more research proving their product is harmful C)  Celadon promotes the use of the precautionary principle D) Etalia claims that their product is not harmful  

When communicating with people who lack information about change, to help them understand linkages with more extreme storms: A) Hassol recommends using metaphors like “loading the dice” to help people understand better B) Hassol recommends against using metaphors like “loading the dice” because they are confusing  

Which of the following components are involved in the function of the neuromuscular junction?

Which of these companies is using the “Deny” strategy from the 3-D Approach to Issues Management? A) Axis denies that oil and gas cause cause climate change after their own scientists confirmed it B) Betadyne denies their plant caused a green coating on neighbor’s cars because UC scientists confirmed it is pollen C) Cynamic denies activists access to their safety records D) Dedux denies that they have been sued in the past for illegal dumping

Given data about if a person will buy computer on Black Friday based on their income, student status, and credit rating. Using Naïve Bayes Classifier to classify the new instance with features “Income = Low, Student = No, Credit Rating = Fair” step by step. What is the value of P(Credit Rating = Fair | No)?

The validation dataset evaluate the final performance of the trained model.

How can environmental health activists avoid NIMBYism? A) Focus attention on their own communities B)  Encourage companies to relocate outside of the area C) Knock on their neighbors’ doors to get them involved D) Network to help protect other communities from polluters