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Consider the following multfactor (APT) model of security returns for a particular stock. Factor Factor beta Factor Risk Premium inflation 1.2 6% industrial prodcution 0.5

Consider the following multfactor (APT) model of security returns for a particular stock.

Factor Factor beta Factor Risk Premium

inflation 1.2 6%

industrial prodcution 0.5 8%

Oil price 0.3 3%

If T-bills currently offer a 6% yield, find the expected rate of return on this stock if the market views the stock as fairly priced.

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