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Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium 6% Industrial production

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Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium 6% Industrial production () Interest rates (R) Consumer confidence (C) The return on a particular stock is generated according to the following equation: r 13% + 1.31 + 0.8R + 1.00C + e a-1. Find the equilibrium rate of return on this stock using the APT. The T-bill rate is 3%. (Do not round intermediate calculations. Omit the "%" sign in your response.) Equilibrium rate of return a-2. Is the stock over-or underpriced? Underpriced

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