Consider the following multifactor (APT) model of security returns for a particular stock. Factor Risk Premium 8% Factor Inflation Industrial production Oil prices Factor Beta 1.1 0.6 0.3 a. If T-bills currently offer a 7% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not round intermediate calculations. Round your answer to 1 decimal place.) Answer is complete but not entirely correct. 19.0 % Expected rate of return 9 7
Consider the following multifactor (APT) model of security returns for a particular stock. Factor Risk Premium 8% Factor Inflation Industrial production Oil prices Factor Beta 1.1 0.6 0.3 a. If T-bills currently offer a 7% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not round intermediate calculations. Round your answer to 1 decimal place.) Answer is complete but not entirely correct. 19.0 % Expected rate of return 9 7
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Consider the following multifactor (APT) model of security returns for a particular stock.
Factor Risk
Premium
8%
9
7
Factor
Inflation
Industrial production
Oil prices
Factor Beta
1.1
0.6
0.3
a. If T-bills currently offer a 7% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not
round intermediate calculations. Round your answer to 1 decimal place.)
X Answer is complete but not entirely correct.
Expected rate of return
19.0 X %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2698a003-5268-4b71-bdd7-6944a2b07758%2Fae893c7f-6c87-4686-98a0-e50d04dd6e9b%2Fczf9h2c_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider the following multifactor (APT) model of security returns for a particular stock.
Factor Risk
Premium
8%
9
7
Factor
Inflation
Industrial production
Oil prices
Factor Beta
1.1
0.6
0.3
a. If T-bills currently offer a 7% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not
round intermediate calculations. Round your answer to 1 decimal place.)
X Answer is complete but not entirely correct.
Expected rate of return
19.0 X %
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