onsider the following multifactor (APT) model of security returns for a particular stock. Factor Factor Beta Factor
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onsider the following multifactor (APT) model of security returns for a particular stock.
Factor | Factor Beta | Factor Risk Premium | |
Inflation | 1.8 | 7 | % |
Industrial production | 1.2 | 10 | |
Oil prices | 0.8 | 5 | |
a. If T-bills currently offer a 3% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not round intermediate calculations. Round your answer to 1 decimal place.)
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