Problem 7-10 You have been assigned the task of estimating the expected returns for three different stocks: QRS, TUV, and WXY. Your preliminary analysis has established the historical risk premiums associated with three risk factors that could potentially be included in your calculations: the excess return on a proxy for the market portfolio (MKT), and two variables capturing general macroeconomic exposures (MACRO1 and MACRO2). These values are: AMKT = 7.7%, AMACRO1 = -0.2%, and AMACRO2 = 0.9%. You have also estimated the following factor betas (i.e., loadings) for all three stocks with respect to each of these potential risk factors: Stock QRS TUV FACTOR LOADING MKT MACRO1 MACRO2 1.14 0.00 0.81 0.46 0.23 1.08 -0.13 0.00 -0.48 WXY risk-free rate of 3.7%. Round your answers to three decimal places. a. Calculate expected returns for the three stocks using just the MKT risk factor. Assume Expected return for stock QRS: % Expected return for stock TUV: % Expected return for stock WXY: % b. Calculate the expected returns for the three stocks using all three risk factors and the same 3.7% risk-free rate. Round your answers to three decimal places. Expected return for stock QRS: Expected return for stock TUV: % Expected return for stock WXY: C. What sort of exposure might MACRO2 represent? MACRO2 might represent -Select- factor