Concept check IX1. You have been assigned the task of estimating the expected returns for three different stocks:Q. T and W. Your preliminary analysis has established the historical risk premiums associatedwith three risk factors that could potentially be included in your calculations: the excess returnon a proxy for the market portfolio (M), and two variables capturing general macroeconomicexposures (F1 and F2). These values are: RPM-7.5%, RPF1 -0.3%, RPF2=0.6%. You have alsoestimated the following factor betas for all three stocks with respect to each of these potentialrisk factors:StockMF1F2Q1.24-0.420.00T0.910.540.23W1.03-0.090.00a. Calculate expected returns for the three stocks using just the M risk factor. Assume arisk free rate of 4.5%b. Calculate the expected returns for the three stocks using all three risk factors and thesame 4.5% risk-free ratec. What exposure might F2 represent?

Answered: y analysis has established the…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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y analysis has established the historical risk pre uld potentially be included in your calculations: rtfolio (M), and two variables capturing genera e values are: RPM=7.5%, RPF1 -0.3%, RPF2=0.6