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) The two-factor model on a stock provides a risk premium for exposure to market risk of 9%, a risk premium for exposure to interest
) The two-factor model on a stock provides a risk premium for exposure to market risk of 9%, a risk premium for exposure to interest rate risk of (-1.3%), and a risk-free rate of 3.5%. The beta for exposure to market risk is 0.5, and the beta for exposure to interest rate risk is also 1.5. What is the expected return on the stock?
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