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You have collected information about 3 companies risk-factor loadings as well as their historically realized average return, all of which is presented in the table

You have collected information about 3 companies risk-factor loadings as well as their historically realized average return, all of which is presented in the table below:

Company Factor 1 Factor 2 Factor 3 Historical return
CAB 1 2 3 12%
AYZ 1 0 1 4%
MON 0 2 1 8%

You also know the risk-free to 1%.

What is the premium of the 2nd risk factor assuming that these stocks are fairly priced?

[Please give your answer in percent to the second decimal. Thus if your response is 1.256% please write 1.26]

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