c) Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium Industrial production (1) 6% Interest rates (R) 2% Consumer confidence (C) 4% The return on a particular stock is generated according to the following equation: r= 15% + 1.01 + 0.5R + 0.75C + e Find the equilibrium rate of return on this stock using the APT. The T-bill rate is 6%. Is the stock over- or underpriced? Explain. (4 marks) 20 MARKS State whether each of the consultant's arguments is correct or incorrect. Indicate, for each incorrect argument, why the argument is incorrect. (4 marks) c) Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium Industrial production (1) 6% Interest rates (R) 2% Consumer confidence (C) 4% The return on a particular stock is generated according to the following equation: r= 15% + 1.07 +0.5R +0.75C + e Find the equilibrium rate of return on this stock using the APT. The T-bill rate is 6%. Is the stock over- or underpriced? Explain. (4 marks)