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Calculate expected rates of return on the following stocks. The risk-free interest rate is 6.8%. a. A stock whose return is uncorrelated with all three
Calculate expected rates of return on the following stocks. The risk-free interest rate is 6.8%. a. A stock whose return is uncorrelated with all three factors. Note: Enter your answer as a percent rounded to 1 decimal place. b. A stock with average exposure to each factor (b=1 for each). Note: Enter your answer as a percent rounded to 1 decimal place. c. A pure-play energy stock with high exposure to the energy factor (b=2.2) but zero exposure to the other two factors Note: Enter your answer as a percent rounded to 2 decimal places. d. An aluminum company stock with average sensitivity to changes in interest rates and GNP, but negative exposure of b =1.5 to the energy factor. (The aluminum company is energy-intensive and suffers when energy prices rise) Note: Enter your answer as a percent rounded to 2 decimal places
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