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QUESTION 1 Last year the return on Harry Company stock was 54. The portion of return on the stock that is not explained by a

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QUESTION 1 Last year the return on Harry Company stock was 54. The portion of return on the stock that is not explained by a two factor macroeconomic model (error) was 3%. Using data in the table below find the expected return on Harry Company's stock (this is the return if ali factor sensitivities are zero). Variable Actual value (%) Expected Value () Stock's Factor Sensitivity change in interest rate 2.0 0.0 -1.5 Growth in GDP 4.0 20 9.5% 1.9% c.8 d. 11%

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