1. Tesla Stock is estimated to have the following sensitivities to Fama-French factors:
2. Factor Sensitivity
3. Market Factor:1.7
4. Size Factor:-0.8
5. Value Factor:-0.7
6. Each Factor is expected to generate the following Risk Premiums:
7. Factor Expected Excess Risk Premium
8. Market Factor:3.5%
9. Size Factor:2.5%
10. Value Factor:2.0%
11. Question:Based on theCAPM Model, what is the REQUIRED RETURN for Tesla?Assume the Risk Free Rate is 0.25%
13. 6.2%
14. 5.95%
15. 2.55%
16. 2.80%