Question: please answer expected rate of return for a &b Consider the following multifactor (APT) model of security returns for a particular stock. Factor Inflation Industrial

Consider the following multifactor (APT) model of security returns for a particular stock. Factor Inflation Industrial production oil prices Factor Beta 1.2 0.5 0.3 Factor Risk Premium 6% 8 a. If T-bills currently offer a 6% yield find the expected rate of return on this stock if the market views the stock as fairly priced. (DO round intermediate calculations, Round your answer to 1 decimal place.) Expected rate of return 95 b. Suppose that the market expects the values for the three macro factors given in column 1 below, but that the actual values turn out as given in column 2. Calculate the revised expectations for the rate of return on the stock once the 'surprises become known. (Do not round intermediate calculations. Round your answer to 1 decimal place.) Expected Value Actual Valut 4 Factor Inflation Industrial production b. Suppose that the market expects the values for the three macro factors given in column 1 below, but that the actual values turn out as given in column 2 Calculate the revised expectations for the rate of return on the stock once the "surprises" become known (Do not round intermediate calculations. Round your answer to 1 decimal place.) Expected Value Actual value 4% Factor Inflation Industrial production oil prices 2 Expected rate of retum %
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