Question: Question 3 1 pts Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 7% and

Question 3 1 pts Consider the multi-factor APT with two factors.

Question 3 1 pts Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 7% and 9%, respectively. Stock A has a beta of 1.2 on factor 1, and a beta of 1.1 on factor 2. The expected return on stock A is 21%. If no arbitrage opportunities exist, then what is the risk-free rate? Round your answer to 4 decimal places. For example, if your answer is 3.205%, then please write down 0.0321

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q25 Question 25 4 pts Consider the multifactor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 5% and 6%, respectively. Stock A has a beta of 1.2 on factor-1, and...

vi . Consider the multifactor APT with two factors. The risk premiums on factor 1 and factor 2 portfolios are 5 % and 6 % , respectively. Stock A has a beta of 1 . 2 on factor 1 , and a beta of 0 . 7...

Consider the multifactor APT with two factors. The risk premiums on factor 1 and factor 2 portfolios are 5% and 6%, respectively. Stock A has a beta of 1.2 on factor 1 , and a beta of 0.7 on factor 2...

Question 5 1 pts Consider the multifactor APT with two factors. Portfolio A has an expected return of 0.164, a beta of 1.4 on factor 1 and a beta of 0.8 on factor 2. The risk premium on the factor 1...

Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 7% and 9%, respectively. Stock A has a beta of 1.5 on factor 1, and a beta of 0.8 on...

Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 6% and 9%, respectively. Stock A has a beta of 1.1 on factor 1, and a beta of 1 on factor...

Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 5% and 7%, respectively. Stock A has a beta of 1.2 on factor 1, and a beta of 0.8 on...

Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are respectively 5% and 3%. Stock A has a beta of 1.4 on factor 1, and a beta of 0.5 on...

Consider the multifactor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 5% and 6%, respectively. Stock A has a beta of 1.2 on factor 1, and a beta of 0.7 on...

Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are 6% and 8%, respectively. Stock A has a beta of 1.2 on factor 1, and a beta of 0.9 on...

In this chapter, we showed an example in which the consumer has preferences for consumption with the perfect complements property. Suppose, alternatively, that leisure and consumption goods are...

Two of the most commonly cited stock market indexes are the Dow and the S&P 500. Which of these two indexes better represents movements in the overall market? Why?

The project control process should . a. be performed on a regular basis b. provide status updates c. identify issues and concerns d. b and c e. All of the above

A projectis an ongoing endeavor undertaken to maintain a reliable product or service. True False

What are the key steps in workforce planning in organizations? Which of your actions, if any, would be different if you were planning human resources for a smaller firm (that employs fewer than 50...

What is the impact of the TFW program on underemployed and unemployed domestic youth? What is the impact of permanent economic immigrants on those same youths?

How might technology solutions support Steve in his role at InfoServe?