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Consider the following informution about two stocks ( O and E ) and two cominen risk factors (1 and 2): a. Assurning that the risk-free

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Consider the following informution about two stocks ( O and E ) and two cominen risk factors (1 and 2): a. Assurning that the risk-free rate is 4.8%, calculate the leveis of the factor risk premia that are consistent with the reported values for the factor betas and the expected returns for the two stocks. Round your answers to one decimal place. b. You expect that in one year the prices for Stocks D and E will be $51 and $32, respectively. Also, peither stock is expected to pay a dividend over the next ves. What should the price of each stock be today to be consistent with the expected return lievels listed at the beginning of the problem? rlound your answers to the nearest cent. Today's price for stock D: $ Tedar's price for Stock E: \$ in Part a. What are the new expected returns for Stocks D and E ? Round your answers to two decimal places. Expected return for Stock D: Expected return for Stock E : d. If the increase in the Factor 1 risk premium in Part c does not cause you to change your opinion about what the stock prices will be in one year, what adjustment wail be necessary in the current (l.e., today's) prices? Do not round intermediate calculations. Round vour answers to the nearest cent. Today's price for Stock 0; $ Today's peice for Stock E: is

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