Question: Please note that this question is worth TRIPLE value. You have collected information about 3 companies risk-factor loadings as well as their historically realized average

Please note that this question is worth TRIPLE value. You have

Please note that this question is worth TRIPLE value. You have collected information about 3 companies risk-factor loadings as well as their historically realized average return, all of which is presented in the table below: Company Factor 1 Factor 2 Factor 3 Historical return CAB 1 2 3 11% AYZ 1 0 1 5% MON 0 2 1 7% You also know the risk-free to 2%. What is the premium of the 2nd risk factor assuming that these stocks are fairly priced? [Please give your answer in percent to the second decimal. Thus if your response is 1.256% please write 1.26]

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