Consider the following multifactor (APT) model of security returns for a particular stock Factor Factor beta Factor risk premium inflation 1 0 0 10 industrial production 1 4 0 09 oil prices 1 4 0 06 If the T bill currently offers a 0 03 yield, then find the expected rate of return on this stock, assuming that the market views the stock as fairly priced

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Question: Consider the following multifactor (APT) model of security returns for a particular stock. Factor Factor beta Factor risk premium inflation 1.0 0.10 industrial production 1.4

Consider the following multifactor (APT) model of security returns for a particular stock.

Factor	Factor beta	Factor risk premium
inflation	1.0	0.10
industrial production	1.4	0.09
oil prices	1.4	0.06

If the T-bill currently offers a 0.03 yield, then find the expected rate of return on this stock, assuming that the market views the stock as fairly priced.

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