IS THE STOCK OVER OR UNDERPRICED?

Suppose the market can be described by the following three sources of systematic risk. Each factor in the following table has a mean value of zero and the risk premiums associated with each source of systematic risk are given in the last column. The risk-free rate is 496. Systematic Factor Industrial production (IP) Interest rates (INT Credit risk (CRED) The return, r, on a particular stock is described by the following equation that relates realized returns to surprises in the three systematic factors: Risk Premium 6% 2% 4% 10% + 1.0 IP + 0.5 INT + 0.75 CRED + e What is the equilibrium expected return on this stock using the APT? 14 O 10 O 13 O 10