2. In APT, we assume a factor to asset returns: Rs=E(Rs)+1F1+2F2+3F3+s which implies that E(Rs)=Rf+1RP(F1)+2RP(F1)+3RP(F1). Here, F1,F2 and F3 are surprises to macro factors. Thus, APT can predict the expected return of stock s, and also predict the how the realization of the return Rs due to surprises in macro factors F1,F2 and F3. Suppose that the market expects the values for the three macro factors given in column 1 below, but that the actual values turn out as given in column 2. Calculate the revised expectations for the rate of return on the stock once the "surprises" become known. [1pt] Consider the following multifactor (APT) model of security returns for a particular stock. 2. In APT, we assume a factor to asset returns: Rs=E(Rs)+1F1+2F2+3F3+s which implies that E(Rs)=Rf+1RP(F1)+2RP(F1)+3RP(F1). Here, F1,F2 and F3 are surprises to macro factors. Thus, APT can predict the expected return of stock s, and also predict the how the realization of the return Rs due to surprises in macro factors F1,F2 and F3. Suppose that the market expects the values for the three macro factors given in column 1 below, but that the actual values turn out as given in column 2. Calculate the revised expectations for the rate of return on the stock once the "surprises" become known. [1pt]