Assume that West Corp shares returns required in the market by investors are a function of two economic factors: S1 is 0.04 and S2 is 0.01, where risk-free rate is 7%. West shares have reaction coefficient to the factors, such that S1 = 1.3 and S2 = 0.90. Compute the expected rate of return using the arbitrage pricing model

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.