Question: 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

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 4.1%. a. A stock whose return is uncorrelated with all three factors. (Enter your answer as a percent rounded to 1 decimal place.) b. A stock with average exposure to each factor (1.e, with b=1 for each). (Enter your answer as a percent rounded to 1 decimal place.) c. A pure-play energy stock with high exposure to the energy factor (b=2.2) but zero exposure to the other two factors. (Enter your answer as a percent rounded to 2 decimal places.) d. An aluminum company stock with average sensitivity to changes in interest rates and GNP, but negative exposure of b=1.5 to the energy factor. (The aluminum company is energy-intensive and suffers when energy prices rise.) (Enter your answer as a percent rounded to 2 decimal places.) a. A stock whose return is uncorrelated with all three factors: (Enter your answer as a percent rounded to 1 decimal place.) . A stock with average exposure to each factor (i.e,, with b=1 for each). (Enter your answer as a percent rounded to 1 decimal place.) c. A pure-play energy stock with high exposure to the energy factor (b=2.2) but zero exposure to the other two factors, (Enter your answer as a percent rounded to 2 decimal places.) d. An aluminum company stock with average sensitivity to changes in interest rates and GNP, but negative exposure of b=1.5 to the energy factor. (The aluminum company is energy-intensive and suffers when energy prices rise.) (Enter your answer as a percent rounded to 2 decimal places.)
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