Suppose stock returns can be explained by the following three-factor model:

R_i = R_F + ₁F₁ + ₂F_{2 3}F₃

Assume there is no firm-specific risk. The information for each stock is presented here:

	1	2	3
Stock A	1.95	.95	.70
Stock B	.84	1.55	.15
Stock C	.87	.41	1.52

The risk premiums for the factors are 7.5 percent, 6.7 percent, and 7.1 percent, respectively. You create a portfolio with 20 percent invested in Stock A , 20 percent invested in Stock B , and the remainder in Stock C.

What is the expression for the return on your portfolio? (Round your answers to 2 decimal places. (e.g., 32.16))

	Factor Beta
Factor F1 9.7 incorrect
Factor F2 9.24 incorrect
Factor F3 1.06 correct

If the risk-free rate is 4.6 percent, what is the expected return on your portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Expected return. (- 2.926 incorrect)

Also

Stock A 1.94 incorrect

Stock B 1.85 incorrect

Stock C -0.636 incorrect

3.154% incorrect