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$1$ Suppose that two factors have been identified for the Canadian economy: IP $($industry

$2$ production growth rate$)$ and IR $($inflation rate$).$ IP is expected to be $4\%,$ while IR is expected to be

$35\%.$ A stock with a beta of $1\mathrm{.}5$ on IP and $0\mathrm{.}8$ on IR is currently expected to provide a rate of return $4$ of $10\%.$ If industrial production actually grows by $6\%,$ while the inflation rate turns out to be $7\%,5$ what is your revised estimate of the expected rate of return on the stock?

$7$

$8$

$9$

$10$

$11$

$12$

$3$

Q$43$

A$43$

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