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Consider the following simplified APT model: Factor Market Interest rate Yield spread Expected Risk Premium ($) 5.8 -0.6 4.4 Stock P Market (1) 1.4 1.4

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Consider the following simplified APT model: Factor Market Interest rate Yield spread Expected Risk Premium ($) 5.8 -0.6 4.4 Stock P Market (1) 1.4 1.4 0.3 Factor Risk Exposures Interest Rate Yield Spread (2) (63) -1.2 -0.2 0 0.5 1.9 0.2 p2 p3 Calculate the expected return for each of the stocks shown in the table above. Assume rr = 3.4%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) % Expected return P Expected return P2 Expected return P3 % %

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