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Consider the following multifactor (APT) model of security returns for a particular stock Factor Inflation Industrial production oil prices Factor Beta 1.0 0.5 0.2 Factor

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Consider the following multifactor (APT) model of security returns for a particular stock Factor Inflation Industrial production oil prices Factor Beta 1.0 0.5 0.2 Factor is Premium 9x 10 o. If T-bills currently offer a 8% yield, find the expected rate of return on this stock of the market views the stock as fairly priced. (Do not round intermediate calculations, Round your answer to 1 decimal place.) Expected rate of return 236) 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 01 given in column 2 Calculate the revised expectations for the rate of return on the stock once the surprises become known (Do not round intermediate calculations. Round your answer to 1 decimal plece.) Expected Value Actual value Factor Inflation Industrial production oil prices 4 2 Expeded rate of return NA

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