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Consider the following simplified APT model: Factor Expected Risk Premium (%) Market 6.2 Interest rate 0.4 Yield spread 4.7 Factor Risk Exposures Market Interest Rate

Consider the following simplified APT model:

Factor Expected Risk Premium (%)
Market 6.2
Interest rate 0.4
Yield spread 4.7

Factor Risk Exposures
Market Interest Rate Yield Spread
Stock (b1) (b2) (b3)
P 1.2 1.8 0.4
P2 1.4 0 0.5
P3 0.3 0.7 0.8

Calculate the expected return for each of the stocks shown in the table above. Assume rf = 4.6%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

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