The following four factors were identifies and later used to explain the return on a stock and level of sensitivity GDP growth: β=0.6, Rp=4% Inflation rate: β=0.6, RP=5% Gold Prices: β=0.8, RP=6% Standard and Poor’s 500 Index Returns: β=2.5, RP=8% The risk free rate is 6%  Using the APT formula, calculate the expected rate of returns on the stock

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The following four factors were identifies and later used to explain the return on a stock and level of sensitivity

GDP growth: β=0.6, Rp=4%

Inflation rate: β=0.6, RP=5%

Gold Prices: β=0.8, RP=6%

Standard and Poor’s 500 Index Returns: β=2.5, RP=8%

The risk free rate is 6%

 Using the APT formula, calculate the expected rate of returns on the stock

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