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Value of x=7; value of xx=97 Q6. 6% Consider the following multifactor (APT) model of security returns for a particular stock. Factor Factor Beta Factor

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Value of x=7; value of xx=97

Q6. 6% Consider the following multifactor (APT) model of security returns for a particular stock. Factor Factor Beta Factor Risk Premium Inflation 1.2 Industrial production 0.5 8% Oil prices 0.3 3% Required: a. If T-bills currently offer a x% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (2 marks)

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