Fama-French Model / Baseline sensitivities for Beta

The Fama-French model estimates required return as (beta market)(equity risk premium) + (beta size)(small cap return premium) + (beta value)(value return premium).

My study guide provider states that the baseline beta for equity risk premium = 1 and that the baseline betas for small cap and value premiums is 0.

Given beta drift, what does having a baseline beta of 0 imply? That over the long-run the required return is primarily determined by the equity risk premium and not size or value?

Pretty much.

Seriously? I thought studies have shown that over long stretches of time there is are small cap and value premium… hence, the reason, for example that small caps have outperformed large caps.

I’m not saying that that’s the median or mean value for those betas; I’m merely saying that if your baseline is 1, 0, 0, you’re assuming all market beta and no size or value beta.