MetaSuppose that the market can be described by the following three sources of systematic risk with associated risk premiums.

Factor Risk Premium

Industrial production $($I$)7\%$

Interest rates $($R$)3$

Consumer confidence $($C$)6$

Required:

The return on a particular stock is generated according to the following equation:

r $=10\%+1\mathrm{.}0$I $+0\mathrm{.}6$R $+0\mathrm{.}80$C $+$ e

a$-1.$ Find the equilibrium rate of return on this stock using the APT. The T$-$bill rate is $3\%.$

Note: Do not round intermediate calculations. Round your answer to $1$ decimal place.

a$-2.$ Is the stock over$-$ or underpriced?