he Franklin Delano Roosevelt Company is considering two models to estimate the required rate of return on its common stock, the Fama French 3 factor model and a 2 factor APT model.

1. The risk-free rate is 1%, the market return is 7%, the return on the SMB portfolio (r_smb) is 3.5%, and the return on the HML portfolio (r_hml) is 4.6%. If a_iequals 0, b_i equals 1.75, c_i equals -.4, and d_i equals 1.5, what is the stocks predicted return based on the Fama French 3 factor model?

2. The risk-free rate is 1%, the expected return on the first factor (r₁) is 12%, and expected return on the second factor (r₂) is 9% percent. If b_i1 equals .8 and b_i2equals 1.2, what is the firms required return based on the 2 factor APT model?