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

Required:

a$.$ If T$-$bills currently offer a $5\%$ yield, find the expected rate of return on this stock if the market views the stock as fairly priced.

b$.$ Suppose that the market expects the values for the three macro factors given in column $1$ below, but that the actual values turn out

as given in column $2.$ Calculate the revised expectations for the rate of return on the stock once the "surprises" become known.

Note: For all requirements, do not round intermediate calculations. Round your answers to $1$ decimal place.