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Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Industrial production (I) Interest rates

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Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Industrial production (I) Interest rates (R) Consumer confidence (C) 6% 2 The return on a particular stock is generated according to the following equation: 15% 1.4/ + 0.7R + 0.90 C + e a-1. Find the equilibrium rate of return on this stock using the APT The T-bill rate is 7%. Do not round intermediate calculations. Omit the "%" sign in your response.) Equilibrium rate of return a-2. Is the stock over- or underpriced? Overpriced Underpriced

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