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Please calculate CAPM calculations. (e) Suppose a four-factor APT model has been deemed appropriate to explain returns for stock 1 and stock 2. These factors
Please calculate CAPM calculations. (e) Suppose a four-factor APT model has been deemed appropriate to explain returns for stock 1 and stock 2. These factors are the market, and three microeconomic firm-level factors, namely dividend yield, size, and profitability. Calculate the expected return for stock 1 and stock 2 using the APT model. Suppose now that the CAPM has been deemed the appropriate model to explain returns. How do the returns calculated under CAPM differ from the returns calculated under APT? Explain your
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