Question: Problem 6-04 Fama-French Three-Factor Model An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 11%, the

Problem 6-04 Fama-French Three-Factor Model

An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 11%, the return on the SMB portfolio (rSMB) is 2.3%, and the return on the HML portfolio (rHML) is 4.9%. If ai = 0, bi = 1.2, ci = -0.4, and di = 1.3, what is the stock's predicted return? Round your answer to two decimal places.

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