JOOL stock has beta factor loads of 2 and -0.5 respectively. At the same time the stock is forecasted by your linear model to earn 10% and you know the risk-free rate to be 1%. Given that the first risk factor has a premia of 5%, what must be the premium on the second risk factor? 

Hint

You may assume all rates are annual.

Answer rating: 100% (QA)

Step 12 Risk free rate 1 Beta factor load 1 2 Beta factor load 2 05 Forecasted return 10 Step 22 ... View the full answer