Consider a three$-$factor APT model. The factors and associated risk premiums are:

Factor Risk Premium $(\%)$

Change in gross national product $($GNP$)+5$

Change in energy prices $1$

Change in long$-$term interest rates $+2$

Calculate expected rates of return on the following stocks. The risk$-$free interest rate is $7\%.$

A stock whose return is uncorrelated with all three factors.

Note: Enter your answer as a percent.

A stock with average exposure to each factor $($b $=1$ for each$).$

Note: Enter your answer as a percent.

A pure$-$play energy stock with high exposure to the energy factor $($b $=2)$ but zero exposure to the other two factors.

Note: Enter your answer as a percent.

An aluminum company stock with average sensitivity to changes in interest rates and GNP$,$ but negative exposure of b $=1\mathrm{.}5$ to the energy factor. $($The aluminum company is energy$-$intensive and suffers when energy prices rise.$)$Consider a three$-$factor APT model. The factors and associated risk premiums are:

Calculate expected rates of return on the following stocks. The risk$-$free interest rate is $7\%.$

a$.$ A stock whose return is uncorrelated with all three factors.

Note: Enter your answer as a percent.

b$.$ A stock with average exposure to each factor $(b=1$ for each$).$

Note: Enter your answer as a percent.

c$.$ A pure$-$play energy stock with high exposure to the energy factor $(b=2)$ but zero exposure to the

other two factors.

Note: Enter your answer as a percent.

d$.$ An aluminum company stock with average sensitivity to changes in interest rates and GNP$,$ but

negative exposure of $b=-1\mathrm{.}5$ to the energy factor. $($The aluminum company is energy$-$intensive and

suffers when energy prices rise.$)$

Note: Enter your answer as a percent rounded to $1$ decimal place.