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Consider the following simplified APT model: Factor Market Interest rate Yield spread Expected Risk Premium (%) 6.2 -0.8 4.8 Stock P p2 Market (bi) 1.0
Consider the following simplified APT model: Factor Market Interest rate Yield spread Expected Risk Premium (%) 6.2 -0.8 4.8 Stock P p2 Market (bi) 1.0 1.0 Factor Risk Exposures Interest Rate Yield Spread (62) (b3) -1.4 -0.6 0 0.1 0.3 2.1 0.6 Calculate the expected return for each of the stocks shown in the table above. Assume re = 3.8%. (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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