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

Factor	Risk Premium
Change in GNP	5.5	%
Change in energy prices	1.5
Change in long-term interest rates	+2.5

Calculate expected rates of return on the following stocks. The risk-free interest rate is 5.0%.

a.	A stock whose return is uncorrelated with all three factors. (Round your answer to 1 decimal place.)

Expected rate of return

%

b.	A stock with average exposure to each factor (i.e., with b = 1 for each). (Round your answer to 1 decimal place.)

Expected rate of return

%

c.	A pure-play energy stock with high exposure to the energy factor (b = 2) but zero exposure to the other two factors. (Round your answer to 1 decimal place.)

Expected rate of return

%

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.) (Round your answer to 2 decimal places.)

Expected rate of return

%