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Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. 3 Factor Industrial production (I) Interest
Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. 3 Factor Industrial production (I) Interest rates (R) Consumer confidence (C) Risk Premium 7% 2% 4% 33.34 points The return on a particular stock is generated according to the following equation: r=18% +0.9/+ 0.4R+ 0.60 C+ e eBook a-1. Find the equilibrium rate of return on this stock using the APT. The T-bill rate is 6%. (Do not round intermediate calculations. Round your answer to 1 decimal place.) Print Equilibrium rate of return % References a-2. Is the stock over- or underpriced? Overpriced Underpriced
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