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Please do with process Suppose that the market can be described by the following three sources of systematic risk with associated risk premia (in line

Please do with process

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Suppose that the market can be described by the following three sources of systematic risk with associated risk premia (in line with the APT). Risk factor Market Momentum Liquidity Risk premium 12 % 8 % 4.5 % Suppose that a particular stock A has a beta of 0.8 on the Market, a beta of 1.4 on Momentum factor and a beta of (-0.4) on Liquidity factor. The risk-free rate is 1.5%. Find the equilibrium rate of return on this stock using the APT. Suppose now that the return on stock A is RA = 22%. Is the stock over- or under-priced

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