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Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. FactorRisk PremiumIndustrial production ( I )7%Interest

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

FactorRisk PremiumIndustrial production (I)7%Interest rates (R)2%Consumer confidence (C)3%

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

r= 17% + 1.6I+ 0.9R+ 1.20C+e

a-1.Find the equilibrium rate of return on this stock using the APT. The T-bill rate is 9%.(Do not round intermediate calculations. Round your answer to 1 decimal place.)

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