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Consider the following simplified APT model Expected Risk Premium (%) 6.4 Factor Market Interest rate Yield spread 5.0 Factor Risk Exposures Market Interest Rate (b2)
Consider the following simplified APT model Expected Risk Premium (%) 6.4 Factor Market Interest rate Yield spread 5.0 Factor Risk Exposures Market Interest Rate (b2) Yield Spread (b3) Stock (b1) p3 .3 1.9 Calculate the expected return for each of the stocks shown in the table above. Assume decimal places.) -4.2%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 Expected return P Expected return P Expected return P3
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