Suppose the market can be described by the following three sources of systematic risk. Each factor in the following table has a mean value of zero (so factor values represent surprises relative to prior expectations), and the risk premiums associated with each source of systematic risk are given in the last column. Systematic Factor Industrial production, IP Interest rates, INT Credit risk, CRED Risk Premium 6% 2 4 The excess return, R, on a particular stock is described by the following equation that relates realized returns to surprises in the three systematic factors: R=6% + 1.0 IP + 0.5 INT +0.75 CRED + e Assume risk free rate is O. Required: a. Calculate the equilibrium expected excess return on this stock using the APT? Equilibrium expected excess return b. Is the stock overpriced or underpriced? O Overpriced O Underpriced