Fama-French Three-Factor Model

An empirical linear asset‑pricing model that explains cross‑sectional variation in equity returns by adding two empirically constructed factors—SMB (small minus big, a size factor) and HML (high minus low, a value factor)—to the market excess return: E[R_i] − R_f ≈ β_mkt·E[R_m−R_f] + β_SMB·E[SMB] + β_HML·E[HML]; the model is estimated by time‑series or cross‑sectional regressions and is empirical