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17. Assume the Arbitrage Pricing Theory holds. You are exploring three factors for pricing stock XYZ. The first factor has a risk premium of 1%

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17. Assume the Arbitrage Pricing Theory holds. You are exploring three factors for pricing stock XYZ. The first factor has a risk premium of 1% and a beta of 1 . The second factor has a risk premium of 3% and a beta of 2 . The third factor has a risk premium of 5% and a beta of 0.5. The current risk-free rate is 2%. What is the expected return of stock XYZ? a. 8% b. 9.5% c. 11.5% d. 7.5%

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