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Consider the following simplified APT model: Factor Expected Risk Premium (%) Market 6.1 Interest rate 0.9 Yield spread 4.7 Stock Factor Risk Exposures Market (b1)
Consider the following simplified APT model: Factor Expected Risk Premium (%) Market 6.1 Interest rate 0.9 Yield spread 4.7 Stock Factor Risk Exposures Market (b1) Interest Rate (b2) Yield Spread (b3) P 1.1 1.3 0.5 P2 1.1 0 0.2 P3 0.3 2.2 0.5 Calculate the expected return for each of the stocks shown in the table above. Assume rf = 3.6%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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