Problem 7-10 You have been assigned the task of estimating the expected returns for three different stocks: QRS, TUV, and WXY. Your preliminary analysis has established the historical risk premiums associated with three risk factors that could potentially be included in your calculations: the excess return on a proxy for the market portfolio (MKT), and two variables cacturing general macroeconomic exposures (MACROS and MACRO2). These values are: A -0.4%, and Amaco -0.3%. You have also estimated the following factor betas (ie., loadings) for all three stocks with respect to each of these potential 6.5%, Aco risk factors FACTOR LOADING Stock ORS MKT MACRO MACRO2 1.25 -0.45 0.00 TUV WXY 0.81 0.56 0.25 0.97 -0.07 0.00 a. Calculate expected returns for the three stocks using just the MKT risk factor. Assume a risk-free rate of 5.5%. Round your answers to three decimal places. Expected retam for stock QRS: Expected return for stock TUV Expected return for stock WXY b. Calculate the expected returns for the three stocks using all three risk factors and the same 5.5% risk-free rate. Round your answers to three decimal places. Expected return for stock QRS: Expected return for stock TV: " Expected return for stock WXY % c. What sort of exposure might MACRO2 represent? HACRO2 might represent Seed factor